Dollar Strengthens; Oil Eases and Nasdaq Hits Record High

Market Wrap-Up: Dollar Strength, Softer Oil, and Record US Stocks

The US dollar strengthened on Monday, with the US Dollar Index (DXY) returning to around 102.50 for the first time since April 2025 as US Treasury yields rose across maturities. Safe-haven demand remained supportive, while fiscal concerns in Europe continued to weigh on risk assets.

US equities nevertheless advanced, with the Nasdaq Composite closing at a record high. The index rose 1.05% to 27,477.31 points, while the S&P 500 gained 0.66% to 7,773.95 and the Dow Jones Industrial Average added 0.18% to 51,267.90. Nvidia climbed 2.1% to a record close, while Microsoft gained 1.5%. Meta Platforms and Tesla each rose about 2%.

The gains came as oil prices eased amid stronger Middle Eastern crude exports and plans for a coordinated G7 release of emergency reserves. Lower energy prices provided some support to equities ahead of the third-quarter earnings season, which begins next week with results from major US banks.

Oil prices edged lower on Tuesday as resilient Middle Eastern exports and the G7 emergency stockpile release eased supply concerns. Brent crude futures fell 4 cents to $100.28 a barrel, while US West Texas Intermediate (WTI) crude futures declined 11 cents, or 0.1%, to $89.33 a barrel by 0003 GMT.

Middle Eastern crude exports exceeded pre-war levels on four days during the final week of September, despite attacks on ships passing through the Strait of Hormuz. The G7 also planned a coordinated release of 100 million barrels from emergency energy reserves and pledged to refrain from energy export restrictions.

However, attacks claimed by Yemen's Houthis on several Saudi sites kept traders alert to potential disruptions. The Houthis said they had targeted sites including King Khalid International Airport in Riyadh, an Aramco refinery in Rabigh and Abha airport. There was no immediate Saudi confirmation.

In US monetary policy, weaker-than-expected September jobs data reduced expectations for an October rate hike. Traders saw around a 23% chance of an increase at the Fed’s October meeting, down from about 70% a week earlier.

Gold remained resilient despite elevated bond yields, although spot prices edged lower on Monday as a stronger dollar and high Treasury yields offset fading expectations for an October Fed rate hike. At the London Bullion Market Association’s annual conference, central bankers said gold continued to hold strategic reserve status amid geopolitical risks, high government debt, and concerns over economic fragmentation.

Central-bank buying and safe-haven demand have continued to support the metal despite this year’s rise in US Treasury yields.

Looking ahead, markets will focus on fresh US economic signals and Fed commentary, while oil-market developments and geopolitical risks remain important drivers of sentiment. 

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DXY:

Key Takeaway:

• Rising US Treasury yields supported the US dollar
• Persistent safe-haven demand continued to underpin dollar strength

Technical Outlook:

• Daily Bias: Bullish
• Support: 101.67
• Resistance: 102.53

XAU/USD:

Key Takeaway:

• Continued central-bank buying provided support for gold demand
• Geopolitical risks and high debt concerns sustained safe-haven demand

Technical Outlook:

• Daily Bias: Bearish
• Support: 4,103
• Resistance: 4,225

WTI:

Key Takeaway:

• Resilient Middle Eastern exports eased concerns over supply disruptions
• Gulf tensions continued to pose risks to regional oil supplies

Technical Outlook:

• Daily Bias: Bearish
• Support: 88.08
• Resistance: 92.03

Dow Jones:

Key Takeaway:

• Lower oil prices provided support for US equity sentiment
• Investors looked ahead to the upcoming third-quarter earnings season

Technical Outlook:

• Daily Bias: Neutral
• Support: 50,825
• Resistance: 51,493

Calendar Watch:

• Weekly ADP Employment Change: Further signals on US labour-market conditions will follow weaker-than-expected September jobs data.
• US Trade Balance: An update on the US external trade position will offer further insight into broader economic conditions.
• API Weekly Crude Oil Inventories: Fresh data on US oil supply conditions could influence crude oil prices and market sentiment.
• Fed Officials Williams and Bowman: Their remarks will be watched for further signals on monetary policy and the outlook for interest rates.

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