Markets Await US CPI as WTI Climbs Above $100

Market Wrap-up: Oil Prices Jump, PPI Meets Expectations and Fed Rate Bets Rise 

Oil prices moved sharply higher in the latest session, with WTI crude gaining 6.7% to settle at $102.48 per barrel, after reaching its highest level since 19 May. Brent crude rose 6.3% to $107.63 per barrel. Oil prices have gained more than 18% so far in September as markets assess the potential implications of a prolonged conflict in the Middle East.

Developments involving Washington and Tehran returned to focus this month following a relatively quieter period in August. Iran has reportedly made several attempts to target US naval vessels, while US forces have destroyed at least eight Iranian oil tankers since Saturday in response.

Iran-aligned Houthi forces in Yemen also targeted energy facilities and other locations in Saudi Arabia this week. More than 70 civilians were injured, while the developments added to concerns that the conflict could spread further across the region.

Since hostilities began in late February, WTI has risen 52.9%, taking its year-to-date gain to 78.5%.

The continued rise in oil prices coincided with weaker risk sentiment during the previous session. The Nasdaq, Dow Jones and S&P 500 all closed lower for a fourth consecutive session.

Meanwhile, the US Treasury completed $5.19 billion of purchases from the $6 billion of long-dated Treasury securities offered for buyback. Alongside the rise in energy prices, the 10-year US Treasury yield moved above 4.95%, reaching its highest level since October 2023.

US producer prices rose 0.4% in August 2026, in line with Dow Jones expectations. On an annual basis, PPI increased by 5.4%, accelerating from 4.8% in July and coming in 0.1 percentage points above forecasts.

Core PPI, which excludes food and energy, rose 0.2%, below expectations for a 0.3% increase. The figures were released ahead of the closely watched August Consumer Price Index report due later today, 11 September.

According to the CME FedWatch Tool, Fed funds futures currently price in a 72.4% probability of a 25-basis-point interest rate increase following the Federal Reserve's meeting next week.

Elsewhere, the European Central Bank raised its key deposit rate by 25 basis points from 2.25% to 2.5%, in line with market expectations. The ECB also forecast core inflation, excluding energy and food, at 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028.

Looking ahead, markets will focus on the August US CPI report, which is expected to provide further insight into the inflation outlook and monetary policy expectations. The University of Michigan's Consumer Sentiment and Inflation Expectations surveys will also be closely monitored.

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DXY:

Key takeaway:

• Rising Treasury yields and expectations of tighter Fed policy kept the dollar supported.
• US inflation data is now the key near-term catalyst for rate expectations and dollar direction.

Technical Outlook:

• Daily Bias: Bullish
• Support: 98.87
• Resistance: 99.39 

Gold:

Key takeaway:

• Gold faces a crucial test as markets await fresh US inflation data after a period of significant repricing in interest rate expectations.
• The CPI release will be closely watched for its impact on interest-rate expectations and near-term gold price movements.

Technical Outlook:

• Daily Bias: Bearish
• Support: 4,282 
• Resistance: 4,434

Oil:

Key takeaway:

• Oil remained the strongest market mover as developments in the Middle East continued to shape pricing.
• The sustained rise in energy prices also added to broader inflation concerns and weaker risk sentiment.

Technical Outlook:

• Daily Bias: Bullish
• Support: 95.38 
• Resistance: 105.00

Calendar Watch:

• US CPI: The main event for reassessing the Fed's policy outlook.
• University of Michigan Consumer Sentiment: A fresh indication of household confidence.
• University of Michigan Inflation Expectations: Closely watched for signals on the inflation outlook.

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