Overnight, while the US slept

Risk came off, but only modestly: US equities closed lower on Monday — the S&P 500 −0.3% to 7,711.76, the Dow −0.9% (−464 points) to 53,885.10, the Nasdaq Composite −0.5% to 26,402.42. Even so, August finished as a winning month for all three. The selling was about inflation arithmetic, not earnings.

Rates & DXY: The US 10-year yield rose 4bp to 4.76%, its highest intraday level since January 2025, with the 30-year up 5bp to 5.26%. The front end had already done most of its repricing on Friday, so the back end led — a bear-steepening (long-dated yields rising faster than short-dated ones), which is the market saying "inflation risk", not "growth risk". The DXY (the dollar index, a basket measure of the US dollar against six major currencies) sits around 99.53 after opening near 99.71, holding close to a two-week high.

The dominant driver — a supply shock with the policy channel wide open: US strikes on Iranian rocket launchers over the weekend were the first escalation since July and pushed Brent above $88. Normally I'd be careful about calling gold lower on a conflict headline, because it depends entirely on what kind of shock it is. This one is a supply-side shock (an oil-driven price spike that raises inflation without raising demand), and critically the central bank is reacting to it rather than absorbing it: Kevin Warsh's Jackson Hole speech on Friday shifted September hike odds to roughly 60% on fed funds futures, up from about 35% the day before. Higher expected policy rates plus higher expected inflation-fighting resolve equals higher real rates (interest rates after subtracting inflation) — and gold hates high real rates. The transmission channel is open, so the chain runs bearish for bullion.

Gold: trading 4449.08/4449.28. Day range 4396.52–4472.05; prior-day high/low 4631.61 / 4445.54. That prior-day high tells the story — a fall of roughly $183 from the top of the previous session, with spot quoted around $4,435 in New York against $4,598.89 on Friday. The bounce off 4396.52 back to 4449 is, my read, a relief rally inside a broken structure rather than the start of a recovery. RSI (a momentum gauge from 0–100; above 70 is stretched, below 30 is washed out) sits at 59.34 on the 15-minute chart — enough of a bounce to sell into, not enough to say the trend has turned.

Crypto: Bitcoin 78,989.33 (15-min RSI 57.87, ATR — average true range, a measure of typical bar-to-bar movement — $206.87); day 78,684.93–78,992.13, prior-day high/low 79,256.93 / 76,927.03. Bitcoin bounced hard off the 76,927 low and has crawled back to the top of its range, but it's still below where it started the session. Ether 2,478.42 (15-min RSI 57.39, ATR $9.02); day 2,467.47–2,478.47, prior-day high/low 2,487.87 / 2,385.02. Both are trading as long-duration risk assets right now, which means rate expectations are in the driver's seat — Ether opened Monday near $2,418 and Bitcoin near $77,695, both well below Friday's opens.

Key FX:

• EURUSD 1.16183 — RSI 63.82 (leaning stretched), ATR 2.2 pips. Day H/L 1.16184 / 1.16152, prior-day H/L 1.16207 / 1.15768. The euro has quietly ground back to the top of its prior-day range, which sits awkwardly against a dollar that just got a hawkish central banker.
• GBPUSD 1.35515 — RSI 57.28, ATR 3.9 pips. Day H/L 1.35523 / 1.35431, prior-day H/L 1.35653 / 1.35286. Mid-range and directionless; nothing to trade here yet.
• USDJPY 159.761 — RSI 52.32, ATR 4.3 pips. Day H/L 159.775 / 159.730, prior-day H/L 160.202 / 159.473. The pair traded above 160 in the prior session and has come back. With US yields at 10-month highs this is the cleanest expression of the rate story, but 160.00–160.20 is where Japan's Ministry of Finance intervention risk (the Japanese government buying yen to stop it weakening further) starts to bite.
• AUDUSD 0.71671 — RSI 56.25, ATR 2.1 pips. Day H/L 0.71674 / 0.71629, prior-day H/L 0.71710 / 0.71542. China's official manufacturing PMI improved to 49.8 in August from 49.2, which stopped the bleeding but didn't excite anyone.
• NZDUSD 0.59184 — RSI 55.06, ATR 2.9 pips. Day H/L 0.59184 / 0.59086, prior-day H/L 0.59239 / 0.59017. Quiet ahead of the RBNZ later this week.
• USDCHF 0.80821 — RSI 48.38, ATR 2.9 pips. Day H/L 0.80827 / 0.80745, prior-day H/L 0.80987 / 0.80687. The franc is the awkward one: hawkish Fed says sell it, Iran headlines say buy it. That cancellation is why I'm leaving it alone.

Cross-asset snapshot:

Asset	Now	vs Prior Close	Vector
S&P 500	7,711.76	−0.3%	Risk-off
US 10Y	4.76%	+4bp	Hawkish
DXY	~99.53	Near 2-week high	USD bid
Gold	4,449.08	−182.53 from prior-day high	Bearish — supply shock + open policy channel
Bitcoin	78,989.33	−267.60 from prior-day high	Weak, range-bound
Brent	~$88	Higher	Iran escalation

Normal liquidity session ahead, but Sydney spreads are wide at the reopen and the real volume doesn't arrive until London.

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