Overnight, while the US slept

A hawkish hold that satisfied nobody: The FOMC left the federal funds rate at 3.50–3.75% for a fifth straight meeting, but the vote was 9–3 — Cleveland's Beth Hammack, Minneapolis' Neel Kashkari and Dallas' Lorie Logan all dissented in favour of a hike. Equities did not enjoy it. The Dow fell 1,153.18 points (−2.19%) to 51,594.14, its worst session since April 2025; the S&P 500 dropped 1.52% to 7,316.15; the Nasdaq Composite lost 1.74% to 24,442.94 and is now more than 10% below its record high — correction territory. Markets are carrying about two 25bp hikes for the remainder of 2026, and Fed officials' own year-end projections span 3.6% to 4.1%.

Rates & DXY — the shape matters more than the level: The US 10-year Treasury yield jumped roughly 7bp to above 4.67%, while the 2-year fell 4bp to about 4.24%. That combination — long rates up, short rates down — is a bear steepener, and it is the bond market's way of saying the central bank has declined to deal with inflation now and will pay for it later. The dollar index (DXY — the greenback against a basket of majors) sits near 101.30 after the sharpest one-day fall in a fortnight as traders trimmed September hike bets.

The dominant driver — the Gulf reignited: Iran's Revolutionary Guard fired multiple ballistic missiles at US forces stationed across the Persian Gulf, and Iran-backed militias in Iraq sent drones at oil facilities in Saudi Arabia's Eastern Region for a second consecutive day. President Trump told Fox News that Iran "is going to get a beating." Brent crude gained 7.9% to close at $90.74 and WTI rose 6.6% to $84.46 — an almost complete round-trip on this month's de-escalation rally, which had taken Brent roughly 20% off its peak only 48 hours ago.

Now apply the framework honestly, because this is where I changed my mind. What we have is a supply-side shock (a war disrupting oil supply, so energy costs and inflation both rise) — and supply-side shocks are normally bearish gold, because they force central banks hawkish, which lifts real rates (interest rates after subtracting inflation, gold's biggest enemy since gold pays no yield). I traded that logic yesterday and it worked for most of the session. But the transmission requires a central bank willing to react, and last night the Fed declined. Oil up 8%, inflation expectations up, three dissenters overruled, front-end yields lower — that is the configuration where a supply shock arrives without the offsetting rise in real rates. Add direct safe-haven demand from missiles landing near US troops and you get exactly what the screen shows: gold up around $120 from yesterday's low while the dollar fell. I'm bullish gold today, and I'm aware that the single thing that breaks this is tonight's inflation print re-arming the hawkish channel.

Gold: trading 4072.46/4072.51. Day range 4060.42–4076.10; prior-day high/low 4116.56 / 3995.97. That prior-day range is $120 wide — gold printed a low near $3,996 before the decision and tagged 4116.56 after it, and it's holding the upper half of that move. RSI on the 15-minute chart (a momentum gauge from 0–100; above 70 is "overbought", below 30 "oversold") reads 58.2 — firm but with room. Note the ATR (average true range, a measure of typical bar-to-bar movement) is $21.21 on the 15-minute, which is enormous for gold; stops have to be wide today or they're just donations.

Crypto: Bitcoin 63,989.5 (RSI M15 54.8, ATR $299.50); day range 63,120–64,028, prior-day high/low 64,658 / 63,279. BTC was dragged down to 63,120 with the equity selloff and has clawed most of it back. Ether 1,907.35 (RSI M15 57.7, ATR $11.55); day range 1,872.22–1,906.52, prior-day high/low 1,929.72 / 1,874.62. Ether is sitting at its session high, and the interesting detail is that it has now bounced twice from almost exactly the same place — 1,874.62 yesterday, 1,872.22 today. That's a real shelf, and it's also the obvious target if equities keep sliding.

Key FX:

• EURUSD 1.14675 — RSI 71.9 (overbought), ATR 9.8 pips. Day H/L 1.14689 / 1.14559; prior-day H/L 1.1471 / 1.13747. The euro has travelled nearly a full figure off yesterday's low and is pressing the prior-day high. Strong, but stretched.
• GBPUSD 1.33696 — RSI 67.9, ATR 13.0 pips. Day H/L 1.33699 / 1.33547, prior-day 1.33873 / 1.32787. Also at the top of its range, with a Bank of England decision in front of it this evening.
• USDJPY 163.422 — RSI 38.1, ATR 8.8 pips. Day H/L 163.446 / 163.376, prior-day 163.907 / 163.232. Look at that day range: seven pips. The dollar has lost the yield argument and the yen has a two-day Bank of Japan meeting starting today. This is the most coiled chart on my screen.
• AUDUSD 0.69582 — RSI 55.8, ATR 10.1 pips. Day H/L 0.69589 / 0.69472, prior-day 0.69889 / 0.69224. Yesterday's Q2 inflation data cooled the headline rate to 3.8% from 4.0% while the trimmed mean — the number the RBA actually sets policy off — held at 3.6%. The Aussie was dumped to 0.6922 on the release and has only recovered because the dollar broke, not because anyone likes it.
• NZDUSD 0.57998 — RSI 56.6, ATR 10.8 pips. Day H/L 0.5803 / 0.57856, prior-day 0.58267 / 0.57619. Back above the 0.5800 handle, dragged up in the euro's wake.
• USDCHF 0.81356 — RSI 32.0 (oversold), ATR 9.6 pips. Day H/L 0.8144 / 0.81338, prior-day 0.8207 / 0.81326. The franc has done the safe-haven work already — a 70-pip move against the dollar in a session. Right idea, but the easy money in it is gone.

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	7,316.15	−1.52%	Risk-off
US 10Y	~4.67%	+7bp	Bear steepener — Fed behind the curve
DXY	~101.30	Sharpest drop in two weeks	USD offered
Gold	4,072.49	+$76.5 off prior-day low (3,995.97)	Bullish — haven bid, real-rate channel blocked
Bitcoin	63,989.5	−$668 from prior-day high (64,658)	Soft, recovering off 63,120
Brent	~$90.74	+7.9%	Gulf escalation

Context: high-volatility session ahead. Liquidity is fine but conviction is thin — we've just had a central bank decision and we get the Fed's preferred inflation gauge tonight, with a Bank of England decision sandwiched in between.

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