8 min read US stocks & the jobs shock
US equities absorbed a hawkish jolt last week as Fed Chair Kevin Warsh delivered his first Jackson Hole keynote as chair on Friday. Warsh flagged PCE inflation still running at 3.7% and said the Fed has more work to do, pushing September rate hike odds from roughly 34% to above 56% within hours. The S&P 500 fell back from a weekly high near 7,816 to 7,712 by Friday’s close, giving back part of a strong August advance built on Treasury bond buyback plans and cooling inflation earlier in the month.
Despite Friday’s pullback, all three major indices closed the week higher, supported by a strong Q2 earnings season and renewed enthusiasm for AI infrastructure spending after Nvidia’s results. The Dow Jones ended at 53,560, and the Nasdaq gained 0.85% for the week.
The S&P 500 rose 0.49% for the week, the Dow Jones 0.53%, and the Nasdaq 0.85%, a fourth straight positive week even after Friday’s slip. The index holds above its rising 100-day EMA near 7,684, with the imbalance left by the early-August breakout, spanning roughly 7,620 to 7,712, still acting as support. A close back above the 7,816 high would open the way toward fresh records, while a break below 7,620 would point back toward the EMA.
Middle East de-escalation & oil
Momentum toward de-escalation and fresh flare-ups both featured in the Gulf last week. Iran and Oman outlined a framework on Tuesday for a temporary shipping channel and mine clearance in the Strait of Hormuz, and President Trump said all mines had been detonated or removed, sending Brent down 3% to near $86. By Friday, Iran’s Revolutionary Guards Navy disputed US claims that the strait was open, while Washington continues threatening what Treasury Secretary Bessent called an economic D-Day against any country aiding Tehran.
Brent trades at $88.29, holding above its rising 100-day EMA near $87.23 and the broader uptrend line from July’s low. Resistance sits at $93.11, the August high, while $84.13 marks the more recent support. With Gulf crude exports still running roughly 47% below pre-war levels, price action remains choppy and headline-driven. A confirmed reopening of the strait would pressure prices toward the lower end of the range, while a fresh attack on shipping could quickly revive the risk premium.
RBNZ Rate Decision (Wednesday)
The Reserve Bank of New Zealand announces its Official Cash Rate decision on Wednesday, and the outcome is genuinely uncertain. The RBNZ raised the OCR by 25 basis points to 2.50% in July on a 3-3 split vote, with Governor Anna Breman casting the deciding vote. Inflation is estimated to have peaked at 3.9% in June, easing to 3.3% by September, and markets price roughly even odds of a hold, a further hike, or a cut.
NZD/USD trades at 0.59134, just below its rising 100-day EMA at 0.59159 after pulling back from a high near 0.598. The pair has twice bounced off its rising trend line and reclaimed the EMA within days on prior pullbacks, and the setup stays constructive if that repeats. A hike would likely support a similar bounce above the EMA, while a hold or cut risks a deeper slide toward the 0.58605 support and the trend line beneath it.
BOC Rate statement (Wednesday)
The Bank of Canada announces its rate decision on Wednesday at 9:45am ET, with Governor Tiff Macklem’s press conference to follow. The BoC has held its overnight rate at 2.25% for six consecutive meetings since October 2025, and markets price only a 6% chance of a hike this time. July’s headline CPI rose to 3% from 2.8%, but escalating trade tensions with the US and a soft labor market have kept the Bank on hold, citing elevated uncertainty.
USD/CAD trades at 1.39047, testing the falling trend line from June’s high near 1.4250 after rebounding sharply from a mid-August low near 1.372. The pair sits just below its 100-day EMA at 1.38918 and the 1.39105 level above it. A hold that keeps the rate differential intact would likely see the pair continue higher toward 1.39640, while a surprise hike would pressure it back toward 1.38254.
Switzerland CPI (Thursday)
Switzerland releases August CPI on Thursday. July inflation eased to just 0.4% year on year, the softest since March, with prices falling 0.1% on the month, the first monthly decline in six months. The SNB has held its policy rate at 0.00% for four straight meetings, and with its own inflation forecast at just 0.6% for 2026 and 2027, there is little pressure to move. As one of the world’s clearest safe-haven currencies, the franc’s reaction to the data says as much about global risk appetite as about Swiss prices.
USD/CHF trades at 0.80936, right at the crossing point of a descending trend line from August’s high and a rising trend line from July’s low, near the 0.80870 level. A soft CPI print would reinforce the SNB’s on-hold stance and could support a break higher if the dollar stays firm, while a stronger reading would pressure the pair back toward the 0.80642 EMA. Holding above the crossing point in the sessions ahead would favor the uptrend continuing.
US NFP (Friday)
Friday’s August jobs report follows July’s shock miss, when payrolls fell 23,000 against a forecast 80,000 gain and unemployment slipped to 4.1% on a falling participation rate. Capital Economics forecasts a modest 90,000 gain for August, with unemployment steady at 4.2%, as a shrinking labor force from lower immigration keeps the breakeven pace of job growth unusually low. A weak print would revive the rate-cut repricing that drove gold to records earlier this month, while a strong report would reinforce Warsh’s hawkish tone.
Gold trades at $4,454.26 after retreating from last week’s record high of $4,696.82, a rally built on Treasury buyback plans and falling real yields that briefly pushed gold toward its strongest month since 1999. Price now sits near the 70.2% retracement at $4,435.51, just below the imbalance left by Friday’s sharp drop. A weak jobs report that revives rate-cut bets could send gold back up to fill that imbalance and toward fresh highs, while a strong report would likely extend the pullback toward the 100% retracement and the 4,400 support zone.
Bottom line
The week hinges on whether Friday’s jobs report confirms the labor market weakness that left Warsh sounding hawkish anyway, or snaps back enough to validate his caution. RBNZ and BOC decisions on Wednesday and Swiss CPI on Thursday add three more currency-specific tests ahead of the main event. A soft NFP print would likely extend gold’s pullback into a buying opportunity and revive the equity rally, while a strong one would harden the case for a September hike and keep pressure on risk assets into the following week.
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