Dollar Soars as Oil Prices Hold Steady Amid US Data Focus

The past week saw oil prices maintain their position in financial markets, despite a solid drop from the mid-September high. The ongoing US-Iran conflict has yet to see a breakthrough, and the lack of restored oil and gas flows could have damaging effects on the global economy.

The US dollar has gained significantly across the board, driven by higher bond yields, safe-haven flows, and repriced Fed rate hike expectations. This is despite concerns over de-dollarization and trade restrictions, which may impact President Trump's policies.

Meanwhile, risk assets have shown resilience, with the Nasdaq 100 index and cryptocurrencies posting solid gains. Bitcoin has risen to a fresh eight-month high, around 50% above its June trough, while ignoring the failed Clarity Act vote in the Senate.

The focus next week will be on US data releases, including Tuesday's Conference Board Consumer Confidence index, Wednesday's ADP and final Q2 GDP reports, Thursday's ISM Manufacturing PMI survey, and Friday's nonfarm payrolls figure. These figures may influence Fed rate hike expectations, as the current hawkish stance suggests another 25bps rate hike by year-end.

Additionally, Fedspeak will continue to shape market sentiment, with speakers from the hawkish camp supporting tighter policy. However, a persistently negative set of prints could push out Fed rate hike expectations and put pressure on the dollar and equities.