During Friday's trading, the US dollar is heading towards recording its third consecutive weekly gain, in light of a sharp selling wave in bond markets.
During Friday's trading, the US dollar is heading towards recording a third consecutive weekly gain, in light of a sharp wave of selling in bond markets, driven by inflation fears resulting from high oil prices, in addition to concerns about the public financial conditions in France, which kept the euro near its lowest levels in 17 months.
On Thursday, investors were exposed to a strong selling wave in global bond markets, which pushed the 10-year US Treasury bond yield to 5.344 percent, its highest level since 2002, before investors’ interest in snapping up bonds at low price levels contributed to market stability, according to Reuters.
The 10-year bond yield recorded 5.247 percent in the latest trading on Friday, while the rest of the bond markets also stabilized, with investors awaiting US jobs data that may affect the outlook for monetary policy in the near term, after weak inflation data weakened interest rate hike bets in October.
The euro reached $1.1237, settling near its lowest level since May 2025. On the other hand, the yen rose slightly to 157.84 yen to the dollar, after data showed that annual core inflation in Tokyo accelerated during September to its fastest pace in 10 months.
The dollar index, which measures the performance of the US currency against a basket of six major currencies, rose to 101.93 points, heading for weekly gains of about 1 percent, in the third consecutive weekly rise, a series that has not been recorded since May 2025.
Moh Siong Sim, currency strategist at OCBC Bank in Singapore, said the initial rise in bond yields was a result of rising energy prices, before being overshadowed by financial risk concerns in Europe.
He added that the weak performance of French and Italian government bonds compared to US Treasury bonds and German bonds indicates that investors are moving towards more liquid and safer sovereign debt markets.
He explained that the dollar's strength is more concentrated against European currencies, with the exception of the Swiss franc, which has seen an improvement in its status as a safe haven.
The Swiss franc rose 0.17 percent to 0.8293 francs to the dollar, and reached 0.9333 francs to the euro after rising by more than 1 percent during the previous session.
The strength of the dollar pushed the pound sterling and the Australian dollar to their lowest levels in three months before they partially stabilized, while the New Zealand dollar rose 0.14 percent to $0.5614, after recording its lowest level since November 2025.
Prashant Neoha, chief interest rate strategist at TD Securities, said that the strength of the dollar reflects a move towards safe assets due to developments in Europe, adding that in such circumstances both the dollar index and the yen could rise at the same time.
All eyes are on US jobs data
Investors' eyes are on the US jobs report scheduled to be released later, Friday, amid expectations that the data will show a slowdown in job growth during September, with the unemployment rate likely to stabilize at 4.1 percent for the third month in a row.
The report comes after data showed on Wednesday that consumer prices in the United States rose at a lower-than-expected pace during August, in addition to a downward revision of July numbers. This prompted traders to reduce their bets on the Federal Reserve raising interest rates later in the month.
Two senior Federal Reserve officials also stressed this week the need to obtain more data before making a decision on any new rate hike.
CME's Fed Watch tool shows that traders are currently pricing in a 72 percent probability that the Federal Reserve will keep interest rates unchanged in October, compared to 36 percent a week ago, with their expectations of a rate hike before the end of the year continuing.
Charu Chanana, chief investment strategist at Saxo, said investors are facing a complex mix of persistent inflation, rising government borrowing, and an increased supply of bonds.
She added that the rise in long-term bond yields despite the decline in expectations for an immediate interest rate hike by the Federal Reserve indicates that market movements have become more closely linked to the term premium and financial risks, and not just to the Fed’s next decision.
In energy markets, Brent crude futures returned to exceed $100 per barrel, as traders watched the faltering talks between the United States and Iran aimed at ending the seven-month-long war in the Middle East.
Gold prices stabilized during Friday trading, but remained on track to record the second consecutive weekly decline, under pressure from the strength of the US dollar and rising Treasury bond yields, at a time when investors are awaiting the release of US non-farm payrolls data that may provide important indicators regarding the direction of the Federal Reserve’s monetary policy.
Gold in instant transactions recorded $4,184.45 per ounce by 04:19 GMT, settling almost without significant change, while its weekly losses so far amounted to more than 2 percent.
On the other hand, US gold futures rose by 0.3 percent to $4,214.70 per ounce, according to Reuters.
The US dollar is preparing to achieve weekly gains; This increases the cost of metals denominated in the US currency to holders of other currencies. US Treasury bond yields for 10 and 30 years also reached their highest levels since 2002 during Thursday's session.
Kyle Rodda, senior financial markets analyst at Capital.com, said that the markets are closely monitoring US interest rate expectations and geopolitical developments in the Middle East.
He added that the US non-farm payrolls data will be a decisive factor in shaping interest expectations, explaining that if the numbers are stronger than expected, it may enhance the possibilities of raising interest by the Federal Reserve, which may put more pressure on gold prices.
During this week, two Federal Reserve officials stressed the need to wait and collect more economic data before deciding on any additional interest rate hike.
The US jobs report for September is scheduled to be released at 12:30 GMT.
Data released on Wednesday showed that US inflation rose less than expected during August, and it also emerged that price pressures in the previous month were more moderate than initial estimates indicated.
Market pricing currently indicates a probability of only about 28 percent to raise interest during the current month, compared to about 70 percent at the beginning of the week, while expectations are still 82 percent likely to approve a new increase in December.
High interest rates usually negatively affect the attractiveness of gold, given that it is an asset that does not generate returns or interest to its holders.
In terms of geopolitical developments, sources reported that Iran is preparing for a broader and more powerful response if the United States resumes large-scale military attacks, in conjunction with the continuation of diplomatic efforts, which Iranian officials see, in private conversations, as having limited chances of success.
As for other precious metals, spot silver rose by 0.5 percent to $61.18 per ounce, platinum rose by 0.6 percent to $1,734.44, while palladium increased by 0.9 percent to $1,181.93. Despite these daily gains, the three metals are heading to record weekly losses.
The performance of Asian stocks was mixed on Friday, as the wave of bond selling deepened globally and investors awaited the release of the monthly US jobs report later today, amid continued uncertainty about interest rates and developments in the Middle East.
Oil prices have largely stabilized, despite the United States sending an additional aircraft carrier and thousands of soldiers to the Middle East, while US President Donald Trump threatened further potential escalation against Iran, according to the Associated Press.
Japan's Nikkei 225 index fell 0.9 percent to 68,326.72 points, while South Korea's Kospi rose 0.2 percent to 6,984.96 points. The Hang Seng in Hong Kong fell 2.7 percent to 23,956.32 points, recording its lowest levels since July.
On the other hand, the Australian Standard & Poor's ASX 200 index rose 0.4 percent to 8,651.30 points, and the Taiwanese TAEX index increased 0.2 percent. Markets in mainland China were closed for a public holiday.
US stock futures rose slightly, after US Treasury bond yields stabilized in early trading.
In the bond market, the yield of 10-year US Treasury bonds reached about 5.25 percent, after touching 5.34 percent yesterday, Thursday, the highest level since 2002. The yield exceeded the 5 percent level last month, with investors demanding higher returns in light of the inflationary pressures resulting from the global energy shock associated with the war with Iran, in addition to the rise in US government debt.
David Clewell, portfolio manager at T. Rowe Price, said that the 5 percent level for the 10-year US bond yield represents an “important psychological threshold” for investors.
Clewell pointed out that the flexibility of US economic growth makes a rise in the 10-year bond yield to about 5.5 to 6 percent “reasonably likely.” The sharp increase in bond yields has put pressure on stock markets, as higher borrowing costs can reduce returns on stocks.
In Europe, major stock indices fell sharply yesterday, Thursday, as government bond yields jumped. On Wall Street, the Standard & Poor's 500 index rose by 0.2 percent, the Dow Jones rose by less than 0.1 percent, while the Nasdaq Composite increased by less than 0.1 percent.
Investors and traders are awaiting the US jobs report for September, scheduled to be released today, in search of additional indicators regarding the possibility of the Federal Reserve raising interest rates in October, after the central bank raised interest rates in September for the first time in three years.
Oil prices fell slightly in early trading today, with continued uncertainty regarding developments in the Middle East and the possibilities of reducing the escalation between the United States and Iran.
An American official said yesterday, Thursday, that the American army is deploying thousands of soldiers on board a group of ships, including a third aircraft carrier, in the Middle East, after Trump threatened on Wednesday to “destroy” them or reach an agreement, in reference to Iran, during his speech with journalists.
Brent crude, the global benchmark for oil prices, fell 0.2 percent to $102.13 a barrel, after rising in Thursday’s session, a much higher level than about $72 a barrel in late February, before the outbreak of war.
The dollar fell to 157.91 Japanese yen from 158.09 yen, while the euro rose to $1.1250 from $1.1244.
