The dollar
US Treasury yields
The curve: today, a month ago, a year ago
Headline vs core inflation, year on year
The gap between headline and core is mostly energy. US: PCE price index and core PCE (BEA). Euro area: HICP and HICP excluding energy, food, alcohol and tobacco (Eurostat), shown when FRED carries current data. Monthly, updated as released.
Source: Federal Reserve (H.10 broad dollar index, H.15 Treasury yields) via FRED. The broad dollar index is the Fed’s trade-weighted index against 26 currencies, not the ICE dollar index (DXY), which is about 58% euro. They usually move together. FRED publishes with a lag of one to several days.
How the balance works
An inflation number moves a market only through what it changes about interest rates. Hot inflation means a central bank has to stay tight; soft inflation lets it ease.
The difference between those rate expectations moves currencies. When Europe runs hot and the US runs soft, the euro rises and the dollar falls. The dollar index is the net sum of all of those moves, the needle on the scale. Gold and most commodities are priced in dollars, so when the needle moves, they move the other way. Gold also answers to the US real yield, the 10-year rate minus inflation expectations: when it falls, holding a metal that pays nothing costs less.
The balance does not explain everything. Central-bank buying, war risk and physical demand, such as Indian buyers switching from gold to silver as prices climb, move gold regardless of the inflation calendar. On a quiet day the balance explains most of the move. On a day with Hormuz headlines, the other forces add to it.
30 September 2026: inflation day
One day, seven countries, and a US data dump on the day the Bureau of Economic Analysis revised its history back to 2021. Times are Brussels time. Market reactions are from the author’s trading screen.
| Time | Release | Actual | Forecast | Previous | Market reaction |
|---|---|---|---|---|---|
| 03:30 | Australia CPI y/y (Aug) | 4.0% | – | 3.5% | Headline jump on fuel (+14.8% m/m, end of fuel tax relief), but trimmed-mean core rose only 0.2% m/m, below forecast, and held at 3.6% y/y. With the RBA having already hiked, the market priced out more: AUD/USD fell from about 0.6997 to 0.6960 in one candle. |
| 29 Sep | Spain CPI y/y flash | 4.9% | – | 4.3% | HICP 5.0%, core 3.1%. Fuel the main driver. |
| 08:45 | France CPI y/y prelim | 3.0% | 2.8% | 2.4% | HICP 3.4%. Silver resumed its opening flow in a small upward channel. |
| ~10:00 | German states CPI y/y | 2.9–3.3% | – | 2.6–2.9% | Bavaria 3.2, Saxony 3.3, NRW 3.3, Baden-Württemberg 2.9. All up 0.3 to 0.4 points. |
| 11:00 | Italy CPI y/y flash | 4.2% | 3.8% | 3.3% | Gold recovering. By 11:25 silver had given back its whole morning rally. |
| 14:00 | Germany CPI y/y prelim | 3.3% | 3.1% | 2.9% | HICP also 3.3%; prices up 0.6% in the month alone (August 0.2%). Euro-area yields stay high. Gold holds, silver sideways from one fix to the next. |
| 14:30 | US core PCE m/m (Aug) | 0.2% | 0.3% | 0.2% | Soft. Silver back to 61.65 and higher, EUR +0.24%, AUD recovered most of its morning loss. |
| 14:30 | US core PCE y/y (Aug) | 3.0% | 3.3% | – | The bigger miss, three tenths below forecast, on the day new methods for pricing software, legal services and portfolio management fees entered the core index. |
| 14:30 | US headline PCE y/y (Aug) | 3.4% | – | 3.4% | Headline held up by energy while core cooled: the same split as Australia and Spain. |
| 14:30 | US GDP q/q (final) | 2.2% | 1.5% | 1.5% | Revised up on the annual revision. GDP price index 6.1% (forecast 6.4%). |
| 14:30 | US personal income / spending m/m | 0.2% / 0.9% | 0.5% / 0.8% | 0.3% / 0.1% | Spending far ahead of income. |
| 14:30 | US goods trade balance | −$132.6B | −$116.3B | −$118.9B | Third wider month in a row, the widest since early 2025. |
| 15:45 | US Chicago business barometer | 58.8 | 51.0 | – | A large beat. Hot growth next to soft inflation: silver and the Australian dollar gave back their PCE gains by the London fix. |
What the day said
Fuel pushes the headline; core decides the market.
Everywhere the story was the same: fuel. Spain, Australia and the euro-area countries all printed higher headline inflation on diesel and gasoline, the channel explained on the crack spreads page. Where core stayed calm, as in Australia, the currency was sold anyway: the market trades what the central bank will do, not the headline.
Then one US number undid most of that. A core PCE print one tenth below forecast lifted the Australian dollar back to within a few pips of where it stood before its own inflation data. The Fed is still the world’s central bank.
Hot Europe and soft America press on the dollar from both sides, because the euro is the largest weight in the dollar index. A widening US trade deficit adds to that, with one caveat: in early 2025 the record deficits were partly gold bars flown to New York ahead of tariffs, and refined copper faces a tariff from 2027. A bigger deficit can mean stockpiling as much as weakness. The detailed trade report will tell.
By the afternoon the US side looked like a Goldilocks mix: inflation cooling, growth running hot. That gives the Fed no reason to hike and no reason to cut, which is why the dollar stalled at its lid rather than breaking.
One more detail for the record: 30 September was the Bureau of Economic Analysis’s annual revision day, with new methods for pricing software, legal services and portfolio management fees. On the day US inflation came in, the ruler used to measure it also changed.
Into the jobs report
The next weights go on the scale this week. China is closed for Golden Week from 1 to 7 October, so price discovery in metals runs through London and New York only, and Shanghai reopens on 8 October with a week to catch up.
| When | Release | Forecast | Previous | Why it matters |
|---|---|---|---|---|
| Thu 1 Oct, 14:30 | US initial jobless claims | 201K | 197K | Layoffs, not hiring. Continuing claims say more about how hard it is to find a new job. |
| Fri 2 Oct, 01:30 | Tokyo CPI | – | – | A lead for Japan, the yen and so the dollar. |
| Fri 2 Oct, 11:00 | Euro area HICP flash (Sep) | – | 3.2% | The country prints point higher. A hot number keeps the ECB under pressure and the euro bid. |
| Fri 2 Oct, 14:30 | US nonfarm payrolls (Sep) | – | – | The verdict on an October Fed hike. A weak report plus a hot euro area presses the dollar from both sides. |
A weak jobs report after a soft PCE would take an October hike off the table and push the dollar toward a break. A strong one could revive the hike case and turn the dollar back up. The diesel crack stays the transmission belt either way: as long as diesel stays high, headline inflation stays high everywhere, whatever core does.
2 October: the jobs report
The week’s last two weights. Times are Brussels time.
| Time | Release | Actual | Forecast | Previous | Market reaction |
|---|---|---|---|---|---|
| 11:00 | Euro area HICP y/y flash (Sep) | 3.8% | 3.6% | 3.2% | Energy up 18.8% on the year (August 14.3%), services 3.2%. Germany 3.3, France 3.4, Italy 4.1, Spain 5.0. Hot Europe should lift the euro and weigh on the dollar. |
| 11:00 | Euro area core HICP y/y flash | 2.5% | 2.5% | 2.4% | In line. Fuel again, not a broad price wave. |
| 14:30 | US nonfarm payrolls (Sep) | +29K | +90K | +133K | August revised down from +162K; the two prior months lost 60K together. Private payrolls only +46K. Odds of an October hike fell from 28% to 15%. 2-year 4.78% to 4.72%, 10-year 5.23% to 5.17%, USD/JPY 157.60 to 157.15. |
| 14:30 | US unemployment rate | 4.2% | 4.1% | 4.1% | Up a tenth. |
| 14:30 | US average hourly earnings m/m / y/y | 0.1% / 3.0% | 0.3% / 3.2% | – | The weakest part of the report: soft wages take pressure off services inflation. |
| Close | US dollar index (DXY) | 101.93 | – | 102.10 | Day range 101.67 to 102.13. Thursday had closed at 102.10 after touching 102.21, the 52-week high. The dollar dipped on the data and held most of the week’s gain: +0.95% from 100.97 the Friday before. |
Hike expectations
In development · updated as data arrives
Between the data and the dollar sits one number: what the market thinks the Fed will do next.
The Fed raised rates in September. Coming into this week, the market priced roughly a 70% chance of another hike at the 27–28 October meeting. Four trading days later it was 15%. The chart logs each step, with the dollar index and the 10-year real yield on the same days.
Odds of an October hike, logged event by event
Odds as reported after each event (sources below), logged by hand. The dollar index (DXY, spot) and the real yield are daily closes for the same date, so two events on one day share a close; Friday’s real yield appears after FRED publishes it.
Market pricing every night: 2-year yield minus fed funds
When the 2-year trades above the effective fed funds rate, the market expects the Fed to go higher over the next two years; below it, it expects cuts. This is a proxy, not the CME FedWatch probability, which is not available as a free feed. Uses the time-range buttons at the top of the page.
The divergence
In development · updated as data arrives
The US inflation and jobs numbers this week all came in soft. The dollar did not fall.
Core PCE missed by three tenths on Wednesday. Payrolls missed by 61,000 on Friday, with downward revisions, higher unemployment and weak wages. Q2 GDP did beat, at 2.2% against 1.5%, but partly on the price deflator: inflation revised lower turns the same spending into higher real growth. Europe, meanwhile, printed 3.8% headline inflation. By the textbook, soft America and hot Europe press the dollar from both sides.
The hike odds followed the textbook, from 70% to 15%. The dollar did not. The DXY closed every day of the week higher than the Friday before, from 100.97 to 101.93, and on Thursday it touched 102.21, its highest in a year, while the odds of a hike were already below 40%.
The second divergence is the one that matters most for gold. From Monday to Wednesday, while the hike odds fell from 70% to 40%, the 10-year real yield rose from 2.90% to 2.93% and the 10-year from 5.24% to 5.29%. The front end priced a gentler Fed; the long end pushed rates higher anyway. A high real yield keeps money in dollars and keeps the cost of holding gold high, whatever the Fed does in October.
Next week: the test before the test
In development · updated as data arrives
CPI on 14 October is the verdict. Wednesday’s Fed minutes are the one release that can move the hike odds before it.
| When (Brussels) | Event | Why it matters for this story |
|---|---|---|
| Mon 5 Oct, 16:00 | US ISM services PMI | Watch prices paid. After Friday’s weak wages, a soft services price index supports the 15%; a hot one questions it. |
| Wed 7 Oct | LBMA trial opens, High Court, London | Not a data release. Families of two Tanzanian miners claim the LBMA was negligent in re-certifying a refinery that processed gold from the North Mara mine. The LBMA calls a duty of care an existential issue: it is a test of the Good Delivery system behind London’s gold market. |
| Wed 7 Oct, 20:00 | FOMC minutes (15–16 September meeting) | The most watched release of the week for this story. They show how many members wanted another hike. Hawkish minutes are the only scheduled event that can lift the odds from 15% before CPI; if they do and the dollar barely reacts, the divergence was never about the Fed. |
| Thu 8 Oct | China back from Golden Week | The Shanghai Gold Exchange and SHFE reopen after 1–7 October with a week of price moves to catch up. Watch the Shanghai premium on Gold Has Three Prices. |
| Thu 8 Oct, 14:30 | US initial jobless claims | A first check on whether Friday’s weak payrolls show up in layoffs. |
| Wed 14 Oct, 14:30 | US CPI (September) | The test set above: soft CPI with the DXY still above 101.35 means the dollar is trading on something other than the Fed. |
The dollar levels
The DXY closed the week at 101.93, after 102.21 on Thursday, its highest in a year. Below, 101.35 and 101.1 are the levels from the author’s chart where the dollar broke out this week; a weekly close back under 101.1 would say the divergence is resolving the textbook way.
The yen: a crack in the other side of the scale
On the author’s chart, Japanese yen futures have made a golden cross: the 50-day average has moved above the 200-day. That is a trend signal for a stronger yen, with USD/JPY still near 157 and the Ministry of Finance having intervened before.
It matters twice. The yen is the second-largest weight in the dollar index after the euro, about 13.6%, so a stronger yen pulls the DXY down directly. And the yen funds carry trades: borrowing cheaply in yen to buy higher-yielding assets. A rising yen forces those positions to close, and that selling hits risk assets first. In August 2024 a Bank of Japan hike and a fast yen rally set off exactly that unwind; for a few days metals were sold along with everything else before recovering. For silver, which this week already showed how crowded leverage behaves, that is the scenario to respect.
Sources
- Federal Reserve Bank of St. Louis, FRED: DTWEXBGS, DEXUSEU, DEXUSAL, DGS3MO, DGS2, DGS5, DGS10, DGS30, DFII10, T10Y2Y.
- Australian Bureau of Statistics, “CPI rose 4.0% in the year to August 2026”, 30 September 2026; investingLive, “Australia August CPI 4.0% as fuel jumps, trimmed mean below forecast at 0.2% m/m”.
- INE, “Flash estimate of the CPI and HICP, September 2026”, 29 September 2026.
- investingLive, “French inflation jumps in September as HICP rises to 3.4%”, 30 September 2026.
- Eurostat, “Annual inflation up to 3.2% in the euro area”, 17 September 2026.
- U.S. Bureau of Economic Analysis, “Annual update of GDP, industry and state statistics publicly available starting Sept. 30”.
- CNBC, “Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected”, 30 September 2026; MacroMicro, US PCE price index y/y.
- U.S. Bureau of Labor Statistics, schedule of releases for October 2026.
- SMM, “SHFE work arrangements for the 2026 Mid-Autumn Festival and National Day holidays”.
- Release figures for France, Germany, Italy and the US as published on the ForexFactory economic calendar, 30 September 2026.
- Federal Reserve Bank of St. Louis, FRED: EFFR (effective federal funds rate).
- investingLive, “Eurozone inflation jumps to 3.8% in September as energy prices surge”, 2 October 2026.
- investingLive, “US September non-farm payrolls +29K vs +90K expected”, 2 October 2026.
- investingLive, “Fed officials lean hawkish, though Williams sees no urgency for another hike”, 29 September 2026.
- investingLive, “Goldman Sachs moves its call for the next Fed rate hike to December from October”, 30 September 2026.
- investingLive, “How have interest rate expectations changed after this week’s events?”, 2 October 2026.
- investingLive, “US GDP final for Q2 2.2% vs 1.5% estimate”, 30 September 2026.
- Mining Weekly, “Centuries-old London Good Delivery system for gold faces modern accountability test”, 28 September 2026; LBMA, “LBMA position on the North Mara mine claim”.
- FedRateCalc, “FOMC minutes release schedule 2026”.
- ICE, U.S. Dollar Index basket weights: euro 57.6%, yen 13.6%, pound 11.9%, Canadian dollar 9.1%, krona 4.2%, Swiss franc 3.6%.
- Investing.com, US Dollar Index (DXY) historical data, daily closes 25 September to 2 October 2026.
Market reactions are the author’s own observations. Educational content to support your own research and decisions. Not financial advice.