Global markets are heading into the new week under pressure from Middle East oil-supply risks and a hawkish repricing of central bank rate expectations. The Reserve Bank of Australia is expected to lift its cash rate from 4.35% to 4.60% on Tuesday, which would mark the fourth Australian hike of 2026. Eurozone flash inflation for September is projected to rise to 3.5% from 3.2%, while US core PCE is expected to increase 0.1% for August and US second-quarter GDP is seen slowing to 1.6% from 2.1%.
Energy and geopolitical supply risks remain a key driver. Oil prices have recovered toward $93 after a sharp correction, testing the 23.6% Fibonacci resistance at $92.75. The rebound follows stalled diplomatic efforts to reopen the Strait of Hormuz: Washington rejected Iran’s proposed seven-day plan, and Tehran has refused to soften conditions. Saudi Arabia has rerouted about 3.5 million barrels per day through its Red Sea pipeline and raised physical transits through Hormuz, but shipping attacks and intercepted Houthi drones have kept supply disruption risks elevated.
Hawkish monetary policy is tightening financial conditions. The 10-year US Treasury yield has climbed to 5.27%, while the 2-year yield is approaching 5%. Markets now price a 70% probability of another Federal Reserve rate hike in October after the Fed’s recent September increase, its first since 2023. Gold fell more than 3.5% in a single session and traded below $4,165, breaking below the 61.8% Fibonacci support at $4,245 and heading toward $4,128.
US jobs data on Friday is expected to show nonfarm payrolls slowing to 100,000 from 162,000 and unemployment rising to 4.2% from 4.1%. The Federal Reserve’s preferred inflation gauge, core PCE, a China NBS manufacturing PMI expected at 50.1, and the Eurozone CPI release are among the week’s highest-impact events. Federal Reserve Governor Lisa Cook has also warned that AI-driven demand could create persistent inflationary pressure, adding another variable to central bank policy debates.
