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US President Donald Trump posted on his Truth Social account on Tuesday that the US is striking Iranian targets near the Strait of Hormuz in retaliation for Iran’s "failed attempt" to add sea mines in the Strait, which currently “has no mines.”

Trump added that Tehran shot eight missiles, “all successfully knocked down,” at a US base in Jordan.

Full post:

The United States is, as we speak, striking Iranian Targets near the Strait of Hormuz. The strikes are large and powerful, and in retaliation for the Iranians’ failed attempt at adding sea mines to the Strait, which currently has no mines (They have been completely removed or detonated!), and the Iranians shooting eight missiles, all successfully knocked down, at our Military Base in Jordan. If the failed Nation of Iran retaliates for this very justified attack, they will be hit again at a much harder and higher level, but it will not be the biggest attack of them all, that is waiting in the wings and, when it is over, there will be very little left of the Islamic Republic of Iran! President DONALD J. TRUMP

The US Dollar (USD) has managed to leave behind the negative start to the week and regained balance on Tuesday. The recovery has come on the back of a generalised recovery in US Treasury yields and ongoing tensions in the geopolitical landscape.

Here is what you need to know on Wednesday, September 2:

The US Dollar Index (DXY) has regained some balance and recovered a big chunk of Monday’s losses, managing to briefly surpass the 99.60 level. The usual MBA Mortgage Applications are due seconded by the more relevant ADP Employment Change, Factory Orders, and the weekly report on US crude oil inventories by the EIA.

EUR/USD has traded on the defensive, slipping back below 1.1600 despite flash inflation data in the Euroland reigniting speculation of an ECB rate hike in September. Next on tap on the domestic docket will be the final S&P Global Services PMI in Germany and the euro zone alongside Producer Prices in the bloc, all due on September 3.

GBP/USD has resumed its decline and returned to the low 1.3500s, quickly forgetting about Monday’s optimism. Absent data releases in the UK tomorrow, the focus of attention is expected to shift to the publication of the final S&P Global Services PMI on September 3.

USD/JPY challenged the area of recent tops past the key 160.00 hurdle, resuming its uptrend and rapidly leaving behind Monday’s hiccup. The Monetary Base figures are due, followed by the speech of the BoJ’s Takada.

AUD/USD has set aside Monday’s decent advance, revisiting the 0.7140/0.7130 band, or multi-day lows. The key Q2 GDP Growth Rate will take centre stage in Oz, seconded by the Ai Group Manufacturing index.

Prices of WTI have built on Monday’s gains and reached fresh two-month highs just cents below the $90.00 mark per barrel in response to a flare-up in US-Iran tensions and increasing supply concerns.

Gold has retreated markedly, coming close to the $4,300 mark per troy ounce and flirting with three-week lows. The better tone in the US Dollar in combination with higher US Treasury yields across the curve has prompted the yellow metal to further extend its multi-day correction.

• DJIA trades near 52,750, roughly 450 points lower, at fresh session lows.
• Central Command confirms strikes on Guard Corps targets inside Iran.
• September hike priced near 70%, with no cut anywhere on the 2027 strip.

The Dow Jones Industrial Average (DJIA) trades near 52,750, roughly 450 points and 0.85% lower, at fresh session lows made after Central Command confirmed that American forces had begun striking Islamic Revolutionary Guard Corps (IRGC) targets inside Iran. A recovery that had carried the index back above the 53,000 handle and stalled short of 53,200 was gone inside the hour. Nothing in Tuesday's American data left a bid underneath it.

Dow Jones 5-minute chart

What the confirmation changed

Two tankers, one Saudi and one South Korean-owned, were hit by projectiles in the Strait of Hormuz overnight, and the American answer arrived as an announced operation rather than an inference drawn from wire chatter. Sunday's exchange could be filed as a one-off. A second round inside 48 hours, confirmed on the record and aimed at the Guard Corps directly, is a cadence.

That cadence is what the tape repriced. Roughly six months into a conflict that has produced no resolution, Persian Gulf output runs near two-thirds of pre-war levels and Crude Oil is bid again. Every escalation in the strait feeds the input-cost line the central bank says it is watching, which leaves this index exposed to the war twice over, once through sentiment and again through the discount rate the war keeps propping up.

A miss that came without price relief

The Institute for Supply Management (ISM) manufacturing Purchasing Managers Index (PMI) landed at 54.6 for August against a 55.2 consensus and 55.6 in July, with new orders down to 53.7 from 56.7 and the employment component at 51.2 from 52.8. July job openings came in at 7.271 million against 7.3 million expected. On the growth side, every line moved the way a market hoping for a slower central bank would want.

The prices paid index did not move at all. It printed 71.1 for a second month, a shade under the 72 consensus, which means the survey delivered cooling activity and static input costs in the same release. That is the arrangement that produces a hike into a slowdown rather than a pause, and it is why a real data miss bought the index about half an hour and nothing further.

The bond market is writing the discount rate

Yields did the rest of the work. The 10-year Treasury note traded up to 4.78%, its highest intraday level since January 2025, with the 30-year back near 5.30% and the two-year around 4.34%. The selling was not confined to the United States, with short-dated European and Japanese paper marked lower alongside it.

What matters for equity valuation is that the long end kept rising after the Treasury expanded its buyback operation last month, which says the pressure is not purely an expectation about policy. Heavy issuance, an elevated term premium and competition for capital all sit inside that number. A monthly factory survey does not out-argue a discount rate being set by supply.

No cut left on the board

Futures put the odds of a hike at the September 16 meeting near 68%, up from roughly 35% before the Jackson Hole keynote, and the October 28 meeting carries a 95% probability of a target range at 3.75% to 4.00% or higher. December splits close to evenly on a second move, and by the January 27 meeting the higher range is 81% priced.

The part that matters for a price-weighted index of large American companies is what the strip does beyond that. From December onward the current 3.50% to 3.75% range carries no probability at all, and every 2027 meeting on the board prices a floor of 4.00% to 4.25% or above. This is not a market discounting one hike into a passing inflation scare. It has taken the cut off a two-year horizon.

Official commentary is pulling the same way. A voting Federal Reserve governor said Tuesday morning that if inflation does not appear to be moderating sufficiently, the committee should act decisively to raise rates, and pointed at the September 15-16 meeting as the place to weigh it. The Treasury Secretary argued the opposite in public, calling this a supply shock into which a central bank does not traditionally tighten.

The numbers that carry the week

Private payrolls land Wednesday at 12:15 GMT with 48K forecast against 44K, followed by July factory orders at 14:00 GMT at 0.7% MoM after a 0.3% decline, and the Beige Book at 18:00 GMT. None of that alters a reaction function.

Thursday carries the release that does. The ISM services index arrives at 14:00 GMT with a 54.3 forecast against 54.1, its prices paid line last at 70.3 and its employment component in contraction at 47.4. Friday's August employment report is forecast at 58K after a 23K contraction, the unemployment rate held at 4.1%, and average hourly earnings accelerating to 0.3% MoM from 0.1% against 3% YoY from 3.2%. Payrolls are the advertised event, and the services price line is the one that moves the September vote.

Levels to watch

Resistance: The 53,000 handle capped the recovery attempt and now sits above the tape. Beyond it the session high area near 53,250 is the first real test, with 53,500 and the record just short of 54,750 further out.

Support: The session floor sits in the 52,750 area, with the rising 50-day Exponential Moving Average (EMA) near 52,700 immediately beneath it. Losing that line removes the structure the entire August advance was built on and opens 52,500 and then the 52,000 handle, with the 200-day EMA near 50,000 nowhere in play.

Bias: Bearish. Objectives at 52,500 and then the 52,000 handle, with a daily close back above 53,250 the level that breaks the sequence. The daily Stochastic Relative Strength Index (Stoch RSI) near 34 is falling with room beneath it, and the intraday reading near 14 argues for a bounce that gets sold rather than a floor.

Dow Jones daily chart

• WTI trades just above $88.00 after a session high just short of $89.00.
• Better than a dollar and a quarter added in three five-minute bars.
• Jask hit, the export terminal built to bypass the Strait of Hormuz.

Crude Oil reached its session high in a straight line rather than a grind, with West Texas Intermediate (WTI) pinned beneath $87.50 through the afternoon before taking better than a dollar and a quarter in three consecutive five-minute bars to print just short of $89.00. It has since given back better than half a dollar to trade just above $88.00, and Brent ran with it to near $93.50.

WTI, 5-minute chart

A campaign, priced before it was confirmed

Central Command has confirmed that American forces began striking Islamic Revolutionary Guard Corps targets at 16:00 GMT, citing recent attempted attacks on commercial shipping in the Strait of Hormuz and on American personnel in the region. The tape had already done its repricing by the time that statement landed, moving on the first wire reports roughly ten minutes after the strikes began.

Reporting sourced to three United States officials had the president weighing a Central Command plan for precisely this, limited strikes inside the strait to stop Iran rebuilding the radar and missile capability it uses to threaten shipping. A campaign with a stated objective and no announced end date prices very differently from one retaliatory night, which is why the repricing arrived all at once instead of building through the afternoon.

The step up sits in the map, not the tonnage

Sunday's action was two rocket launchers on Larak Island, described at the time as limited and precise. What arrived on Tuesday runs the length of the southern coast, with reported targets at Bandar Abbas, Minab, Qeshm and Sirik inside the strait, and at Jask, Konarak and Chabahar beyond it.

That geography is the escalation. Jask is Iran's terminal on the Gulf of Oman, the end of a pipeline built so barrels could leave the country without passing through the Strait of Hormuz, and Chabahar is the only Iranian ocean port outside the Persian Gulf and the workaround to the naval blockade since April. Hitting the bypass alongside the chokepoint attacks export capacity rather than transit capacity, which is the difference between barrels delayed and barrels gone.

The awkward part for anyone chasing the move is the stated objective. The plan exists to make the strait passable, so a version of it that works ends with more barrels moving rather than fewer. Tehran has framed its own reply, with the country's parliament speaker warning this week that if Iran is barred from exporting through the Persian Gulf, no other producer will export either.

No damage assessment exists yet and nothing in the reporting confirms a barrel removed, so what is being bought here is a direction of travel. That has been worth paying for since Sunday, and the give-back off the highs is the market marking the difference between an intention and a shortfall.

Levels to watch

Resistance: The session high just short of $89.00 caps the move, and the round number above it is the first thing a continuation has to take. Beyond that the late-July spike just above $92.00 is the next real mark on the chart, with Brent's equivalent near $96.00.

Support: The reclaimed August ceiling just short of $87.50 is the level a genuine breakout has to defend on the retest, with the session low just above $85.00 beneath it. Further back, the 50-day Exponential Moving Average (EMA) near $82.00 carries the whole August advance.

Bias: Higher while $87.50 holds on the pullback, with the late-July peak above $92.00 the objective. The 5-minute Stochastic Relative Strength Index (Stoch RSI) near 95 is rolling over from the spike and the tape has already surrendered better than half a dollar, so the retest comes first. The daily reading near 73 still has room above it. Invalidation on a daily close beneath $87.00.

WTI daily chart

Iran International reported on Tuesday explosions in Chabahar, Bandar Abbas and other Iranian cities near the Strait of Hormuz.

Recently, Axios reported that the US Air Force struck Iranian targets around the Strait of Hormuz, citing sources

Recently, via the US CENTCOM account on X, the US Central Command announced that US forces "began striking Islamic Revolutionary Guard Corps (IRGC) targets in Iran. The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region."

Market reaction:

West Texas Intermediate, the US crude Oil benchmark, rose to $89.90, though as of writing, it is up nearly 4%, due to a resumption of hostilities between the US and Iran.

US Treasury Secretary Scott Bessent said on Tuesday that he emphasized the importance of sound formulation and communication of monetary policy to anchor inflation expectations in a meeting with Bank of Japan (BoJ) Governor Kazuo Ueda.

Bessent added that the support Japan’s steps to address the undervaluation of the Japanese Yen.

Key highlights:

I EMPHASIZED THE IMPORTANCE OF SOUND FORMULATION AND COMMUNICATION OF MONETARY POLICY TO ANCHOR INFLATION EXPECTATIONS IN MEETING WITH THE BANK OF JAPAN GOVERNOR.

I EXPRESSED STRONG SUPPORT FOR JAPAN'S DECISIVE MARKET AND MONETARY STEPS TO ADDRESS THE SUBSTANTIAL UNDERVALUATION OF THE YEN.

I TOLD THE BOJ GOVERNOR TO AVOID EXCESS FX RATE VOLATILITY.

• NZD/USD declines on Tuesday as the US Dollar holds onto modest gains.
• US manufacturing activity loses momentum in August, while job openings come in slightly below expectations.
• Investors now turn their attention to the Reserve Bank of New Zealand’s monetary policy decision on Wednesday.

NZD/USD trades around 0.5900 on Tuesday at the time of writing, down 0.24% on the day. The New Zealand Dollar (NZD) remains under pressure against the US Dollar (USD), which holds onto modest gains despite the release of mixed United States (US) economic data.

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) falls to 54.6 in August from 55.6 in July, below the market consensus of 55.2. The indicator nevertheless remains well above the 50 threshold, signaling that US manufacturing activity continues to expand, albeit at a slower pace.

Looking at the details, the Employment Index declines to 51.2 from 52.8 previously, while the New Orders Index eases to 53.7 from 56.7 in July. Meanwhile, the Prices Paid Index remains unchanged at 71.1, indicating that price pressures remain elevated.

Labor market data also provide a mixed signal. The Bureau of Labor Statistics (BLS) reports that job openings, as measured by the Job Openings and Labor Turnover Survey (JOLTS), rise to 7.271M in July from 7.182M in June but remain slightly below the 7.3M expected. Hires and total separations are little changed at 5.1M.

The releases fail to trigger a significant reversal in the US Dollar. The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, posts gains around 99.65 on Tuesday. The resilience of the Greenback therefore keeps NZD/USD under pressure despite the slightly weaker-than-expected US figures.

Investors’ attention now shifts to the Reserve Bank of New Zealand (RBNZ), which is due to announce its monetary policy decision on Wednesday. New Zealand’s interest-rate outlook could become the main near-term catalyst for the New Zealand Dollar, while markets also assess the implications of the latest US economic data for the Federal Reserve’s (Fed) monetary policy path.

NZD outlook softens as RBNZ risks underwhelming hawkish expectations

Analysts at ING expect the RBNZ to deliver a widely anticipated 25bp hike to 2.75% at tomorrow’s meeting, noting that “consensus is unanimous and markets are fully pricing in the move.” With the rate increase itself unlikely to surprise, ING argues that the reaction in the New Zealand Dollar will hinge on “whether the statement will still include firmly hawkish guidance, and on updated rate/economic projections.”

ING highlights “some downside risks for NZD,” pointing out that current market pricing of “95bp by June 2027 looks way too hawkish.” To justify that path, they say “the Reserve Bank would need to revise rate projections materially higher, as they currently embed only another 25bp hike for the next three quarters.” However, ING adds, “we don’t think they will, as we instead expect CPI projections to be revised lower on the back of softer oil prices.”

Against that backdrop, ING sees scope for renewed currency weakness, stating that “we see NZD/USD trading back below 0.590 in the near term as the RBNZ may fail to meet hawkish expectations and USD finds some support.”

• Gold slides further on Tuesday after reversing from a more-than-three-month high last week.
• Hawkish Fed expectations and rising Treasury yields keep the precious metal under pressure.
• XAU/USD tests a key support zone as momentum shifts in favour of sellers.

Gold (XAU/USD) extends its pullback from the more-than-three-month high touched last week and falls to a fresh two-week low on Tuesday. Rising expectations of Federal Reserve (Fed) interest rate hikes and fresh tensions in the Middle East remain the main drivers behind the latest leg lower. However, softer-than-expected US economic data help cushion the downside.

At the time of writing, XAU/USD trades around $4,373, down nearly 1.68% on the day after touching an intraday low of $4,326.

The ISM Manufacturing Purchasing Managers Index (PMI) fell to 54.6 in August from 55.6 in July, missing the market forecast of 55.2. The ISM Prices Paid Index held steady at 71.1, below expectations of 72.0, while JOLTS Job Openings rose to 7.271 million in July from 7.182 million but fell short of the 7.3 million forecast.

Despite the data misses, expectations that the Fed could raise interest rates as soon as this month keep the US Dollar and Treasury yields supported. The US Dollar Index (DXY) is trading around 99.64, up 0.23% on the day. Meanwhile, the benchmark 10-year US Treasury yield hovers around 4.76% after touching 4.80%, its highest level since January 2025.

A firmer US Dollar makes Dollar-denominated Gold more expensive for overseas buyers, while higher Treasury yields increase the opportunity cost of holding the non-yielding metal.

Chair Kevin Warsh’s tough rhetoric on inflation at the Jackson Hole Symposium revived rate hike bets, with the CME FedWatch Tool showing around a 65% probability of a hike at the September 15-16 meeting, up from roughly 40% a week ago.

Fed Governor Michael Barr added to the hawkish tone on Tuesday, saying that “the persistence of inflation above target creates risks.” Barr said he favours steady rates if confident inflation is moderating but warned that “if inflation doesn’t moderate soon, it will be time for an interest rate hike.”

At the same time, rising Oil prices are adding to inflation concerns and reinforcing expectations that major central banks may need to keep monetary policy tight. West Texas Intermediate (WTI) Oil advances for a second consecutive day following the latest flare-up around the Strait of Hormuz.

Typically, inflation and geopolitical concerns support Gold. However, the market is currently reacting through the interest rate channel, and the metal tends to perform poorly when interest rates and Treasury yields rise.

Sellers are therefore likely to retain the upper hand in the near term, although upcoming US economic data and developments in the Middle East could trigger fresh volatility. Attention now shift to the ADP Employment Change report on Wednesday and the closely watched Nonfarm Payrolls (NFP) report on Friday.

Technical analysis: XAU/USD extends decline, eyes support near $4,350

On the daily chart, XAU/USD extends its decline below the 200-day SMA and is now testing the 100-day SMA near $4,365, a level that also aligns closely with the 50% Fibonacci retracement at $4,350, forming a key support zone. A daily close below this cluster would tilt the near-term bias bearish, exposing the 61.8% retracement near $4,267.

The Relative Strength Index (RSI) at 49 sits near the midline, hinting at balanced conditions, while the Moving Average Convergence Divergence (MACD) indicator is in negative territory, suggesting waning bullish momentum after the recent pullback.

On the downside, a break below the $4,350-$4,365 support zone would open the door toward $4,267 (61.8% retracement), followed by $4,149 (78.6% retracement) and the prior cycle low near $4,000.

On the upside, initial resistance emerges at $4,432 (38.2% retracement), with a stronger barrier near $4,530 (200-day SMA) and $4,534 (23.6% retracement). A sustained break above this zone would open the path toward the $4,700 region.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Treasury Secretary Scott Bessent said on Tuesday that Japan is taking the right steps for its economy, and that G20 finance ministers want more growth.

Furthermore, Bessent said it’s unclear whether G20 ministers will take the “steps necessary” to achieve higher economic growth, noting that the world needs to protect trade and factory jobs from China’s exports.

Key highlights:

I THINK THAT JAPAN IS TAKING RIGHT STEPS FOR ECONOMY

G20 MINISTERS WANT MORE GROWTH

UNCLEAR WHETHER G 20 MINISTERS WILL TAKE STEPS NECESSARY TO ACHIEVE HIGHER GROWTH

I EXPECT EVERYONE TO COME ALONG WITH US ON IRAN.

IMBALANCES CREATED BY SOME COUNTRIES ARE REDUCING GROWTH ELSEWHERE. I HAVE BEEN TALKING ABOUT IMBALANCES AT THE G20.

IMBALANCES CREATED BY SOME COUNTRIES ARE REDUCING GROWTH ELSEWHERE

REST OF THE WORLD NEEDS TO TAKE STEPS TO PROTECT TRADE, FACTORY JOBS FROM CHINA’S EXPORTS

SEVERAL LOW-INCOME NATIONS MAY NEED DEBT RESTRUCTURING.