On paper, this was the dollar’s week. US inflation jumped to 3.7% in September, above forecasts, and core inflation rose to 2.6%. Hot inflation usually means higher rates and a stronger dollar. Instead, the dollar posted its first weekly loss in more than a month.
The data only explains part of that. Late Thursday night New York time, Fed Chair Kevin Warsh told an audience in Bangkok that he doesn’t prejudge meetings, and odds of an October hike fell to about 16%. The rest came from outside the data. In the Gulf, attacks on ships in the Strait of Hormuz hit their highest level since the war began, and Houthi missiles kept targeting Riyadh’s airport and hit an Aramco office building in Dhahran. WTI settled at $101.41, and Brent touched $110. In tech, the AI trade cracked, and money rushed into bonds, pulling US yields lower.
Every market below is a version of the same story: a war, a chip race and a trade fight setting prices before the data does.
📈 NQ Futures
For years, the US-China chip race has made the Nasdaq money. This week it cost it.
On Monday, China’s top memory chipmaker, CXMT, reported fresh progress despite years of US export controls designed to hold it back. The same day, Broadcom’s CEO compared some AI investors to gamblers in a casino. Asia reacted first: South Korea’s chip-heavy KOSPI had its worst week since 2008.
Then the war raised the cost. Oil above $100 keeps inflation hot. Hot inflation keeps US yields near 5%, and high yields make borrowed money expensive, which matters because the AI build-out runs on borrowed money. CoreWeave, which rents out Nvidia chips, carries about $50 billion in debt, and bond investors now see a serious chance it can’t repay. The chip index is about 20% below its June peak, and the Nasdaq 100 had its worst week since April 2025, down 5.49%.
Looking at the daily chart, NQ broke above its June all-time high in early October, then gave all of it back.
NQ Futures Daily Chart
Closed Friday around 29,391, after a straight run down from the highs
Next level: the daily Fair Value Gap (FVG) at roughly 29,000-29,100, which has held twice since August
If that breaks: we expect price to move toward 27,500, the August low
The fundamentals back the downside case. The war is keeping yields high, debt markets are under strain, and China is closing the chip gap. Wednesday is the trigger: Meta reports after the close, and it’s one of the biggest buyers of AI chips. A weak spending outlook would likely push price through the FVG. A strong one could make the gap hold.
What would break it: strong spending plans from Meta, or a calmer Gulf before the November 3 midterms that pulls yields down.
🇯🇵 USD/JPY
The yen is caught between Washington and Tokyo, and the war in the Gulf makes it harder to defend.
Washington wants a stronger yen. Treasury Secretary Bessent has pushed the Bank of Japan (BOJ) for months to keep hiking, and on July 31 the two governments bought yen together with USD/JPY near 164. You can see that day on the chart: one huge red candle. The BOJ hiked in September to 1.25%. On Tuesday, Bloomberg reported it’s leaning against another hike on October 30, but markets still price an 88% chance by December.
Tokyo is defending the yen with warnings. After the US inflation report, Finance Minister Katayama said Japan could take decisive action and that its joint position with Washington hasn’t changed.
Looking at the daily chart, price is back at the shelf that has capped it since August.
USDJPY Daily Chart
157.95-159.00: the resistance zone (blue), which has rejected price repeatedly since late September
Entry: around 157.97, and we’re in the trade as a swing short
Invalidation: above 159.05
Target: 153.52, just above the September lows, which gives roughly four times the risk
Here’s why the fundamentals support the short. The gap between US and Japanese rates is closing from both sides: October Fed hike odds collapsed this week while BOJ hike odds for December stay high. Washington has already shown it will buy yen alongside Tokyo. And the pair is sitting right under the level where both governments start talking.
What would break it: an oil spike, since Japan imports almost all its energy and every jump costs it more yen. A BOJ that rules out December would also do it, and with Prime Minister Takaichi seen as favoring caution, that risk is real.
🇨🇦 USD/CAD
Canada is selling oil into a war-driven price spike while its biggest customer talks about taking it over.
On Wednesday, at a rally in Arizona, Trump said Canada will “end up being the 51st state.” A day later, Prime Minister Carney told a rally in Calgary that forces outside Canada are trying to break the country apart so they can take it over. US-Canada trade talks collapsed in August, and both sides now have tariffs in place. On Monday, October 19, Albertans vote on whether to hold a referendum on independence. Alberta is Canada’s oil heartland, and polls show about 75% want to stay.
This week, oil won. Crude above $100 helps Canada, since oil is its biggest export. Bank of Canada Governor Tiff Macklem also said in Bangkok that high energy prices get harder to ignore the longer they last.
Looking at the daily chart, the pullback we’ve been waiting for is happening.
USDCAD Daily Chart
Range: roughly 1.3760 low to 1.4294 high
Top zone: 1.4255-1.4294, where price stalled for two weeks before rolling over
Friday’s close: around 1.4138
Entry level: the 50% of the range, around 1.4027, where we’re looking for a long
The fundamentals still favor a higher USD/CAD over time. The Fed sits at 3.75–4.00% against the Bank of Canada’s 2.25%. Canada lost 68,300 jobs in September. Tariffs are still in place, and Washington is escalating its rhetoric instead of returning to talks. Oil is causing this pullback, but it hasn’t changed any of those facts. We’re letting oil push price down to our level instead of chasing it.
Monday decides how we get there. Canada’s inflation lands at 8:30 am, with economists expecting 3.2%. A hot print could speed the drop into the 50%, but it would also raise the odds of a Bank of Canada hike on October 28, and that would weaken the long case.
Macro lean: higher from the 50%.
What would break it: a hot inflation print that puts an October 28 hike on the table, or oil staying above $100 for weeks.
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