Dollar Slips Before CPI as Oil Rises and Equities Falter

All eyes are on the U.S. CPI report due Wednesday, which represents the next major hurdle for financial markets. The key issue is whether inflation stays mostly an energy story or starts to show up more widely across prices. That debate gained extra significance after Boston Fed President Susan Collins repeated her backing for another rate increase before the year is out.

Trading on Tuesday was uneven across asset classes. The greenback surrendered ground to every major currency, yields on longer-dated Treasuries declined, and equity benchmarks finished slightly down following a choppy session. Crude kept climbing as tensions in the Middle East continued to hang over supply and shipping. A better-than-expected existing-home sales print had only a muted effect on markets.

Dollar slides against major peers

In the late-session readings, the dollar was down against all the main currencies. It lost the most ground to the Canadian dollar and the least to the yen.

These were the currency levels at the late snapshot:

• EURUSD: 1.1196, +0.39%.
• USDJPY: 158.30, −0.20%.
• GBPUSD: 1.3251, +0.34%.
• USDCHF: 0.8324, −0.24%.
• USDCAD: 1.4213, −0.48%.
• AUDUSD: 0.6981, +0.32%.
• NZDUSD: 0.5611, +0.45%.

Firmer crude prices underpinned the Canadian dollar, as did chart-based signals in a technical analysis item available here. More broadly, the dollar's pullback unwound part of Monday's advance as market participants positioned themselves ahead of the CPI release.

Long-end Treasury yields soften

The Treasury market at the late snapshot showed the 2-year yield edging higher, while longer maturities fell:

• 2-year: 4.7974%, +0.64 basis points.
• 5-year: 5.0085%, −1.25 basis points.
• 10-year: 5.2168%, −2.72 basis points.
• 30-year: 5.5660%, −3.33 basis points.

With longer-term yields dropping more than short-term ones, the yield curve flattened. That provided some breathing room from high borrowing costs, yet the 10-year yield still sits north of 5.2%, keeping Treasury levels a key factor for the stock market.

Equities slip after turbulent trading

The small declines in the closing snapshot masked a far bigger intraday swing, especially for the Dow. At its peak the Dow was 466.06 points higher, and at its trough it was roughly 263 points below its prior close. The S&P 500 and the Nasdaq Composite also moved above and below the flat line. The Nasdaq 100 never managed to turn positive during the session.

The figures supplied in the late session were:

• Dow industrial average: 51,675.16, −181.02 points or −0.35%.
• S&P 500: 7,805.45, −1.79 points or −0.02%.
• Nasdaq Composite: 27,204.38, −41.52 points or −0.15%.
• Russell 2000: 2,783.37, −11.11 points or −0.40%.
• Nasdaq 100: 30,569.48, −95.22 points or −0.31%.

Earnings season starts, buyers stay cautious

The latest corporate reporting period opened with results from JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Johnson & Johnson and UnitedHealth. In the earlier snapshot, all six stocks were trading in negative territory.

The market's response is a reminder that surpassing expectations by itself is no assurance of a stock rally. Goldman Sachs came in ahead of forecasts on profit and sales, while JPMorgan fell short on both. Investors also need to factor in guidance, valuations, higher energy prices and the current rate environment.

Europe's main indexes end mostly in the red

Most of Europe's major equity benchmarks closed the day with modest losses, though Italy managed a slight gain:

• Germany's DAX: 25,259.91, −0.07%.
• France's CAC 40: 7,827.64, −0.07%.
• UK's FTSE 100: 10,650.34, −0.06%.
• Spain's IBEX 35: 19,210.70, −0.39%.
• Italy's FTSE MIB: 50,057.17, +0.04%.

Collins stresses inflation's breadth

Boston Fed President Susan Collins described economic uncertainty as high and said she is monitoring how far inflation pressures spread.

Her latest comments came after she had previously voiced support for one more rate increase before the end of 2026. She pointed to AI and data-centre investment, tariffs and energy expenses related to the Middle East conflict as possible drivers of sticky inflation.

The difference is important for markets. Higher gasoline prices can push up headline inflation immediately. If price increases broaden across goods and services, that would point to more deeply embedded pressures and would strengthen the case for additional Fed tightening. Collins' remarks left that issue squarely in focus heading into the CPI report.

New York Fed President John Williams also spoke, saying one additional rate hike is appropriate during 2026 but that he currently sees no case for a further increase in 2027. Williams anticipates a notable slowdown in inflation, with price growth moving toward the Fed's 2% objective next year. He cited only modest broader price pressures apart from AI and energy, and said there is no evidence that the labor market is stoking inflation.

Those remarks calmed worries about more tightening next year, nudging Treasury yields down and adding to the dollar's slide. Williams offered no hint of rate cuts, though. His forecasts still hinge on inflation cooling in line with expectations.

Existing-home sales top forecasts, barely move markets

September existing-home sales ran at an annualized rate of 3.99 million, beating the 3.95 million forecast. Purchases rose 1.5% from the prior month yet were still 2.2% lower than a year ago.

On a monthly basis, the South and West posted increases, the Midwest was flat, and the Northeast saw a drop. Every region registered a year-over-year decrease.

A larger supply of homes and slower selling paces are strengthening buyers' hand in negotiations, even as higher mortgage rates keep acting as an obstacle. The data represented a small step forward for a housing market that remains soft, but it did little to pull focus from inflation and the Fed.

Crude climbs as Middle East dangers linger

Oil futures closed at $94.14, a gain of $0.40, or 0.43%. A subsequent reading put the CL1! contract at $94.93, up $1.19, or 1.27%.

Escalation worries stayed prominent amid reports that President Trump and Israeli Prime Minister Benjamin Netanyahu discussed new action against Iran, that shipping near the Strait of Hormuz was under threat, and that Saudi-led forces struck an oil facility in Yemen linked to the Houthis.

The worry is not limited to crude supplies. If fuel costs stay strong, transport and production expenses can climb, which would keep the wider inflation debate active.

Gold, silver unable to ride weaker dollar

Spot gold changed hands around $4,159.65, off $12.00, or 0.29%. Silver dropped $1.164, ending at $59.1325, a loss of 1.93%.

In ordinary circumstances, a softer dollar and lower long-end yields would be supportive for gold. Tuesday's drop suggested those tailwinds were insufficient to attract buyers before the CPI release. Silver's steeper slide also drew attention, though the figures provided point to no specific trigger.

Bitcoin bounces back

Bitcoin fetched $83,314, a rise of $1,568, or 1.92%.

The move stood out against weaker stock and metal prices. A softer dollar gave some support, yet a single session is not enough to show any durable shift in how bitcoin behaves relative to other risky investments.

CPI looms as next catalyst

The September CPI figures arrive Wednesday at 8:30 AM ET. InvestingLive's preview sees headline inflation up 0.6% on the month and roughly 3.7% from a year earlier, while core prices rise about 0.2% monthly and stay close to 2.4% on an annual basis.

The core figure and the scope of price gains will matter most. A stronger underlying result could rekindle bets on a sooner Fed hike, whereas a weaker one would leave officials with more flexibility to hold off. Beyond CPI, the market will keep an eye on oil, news from the Middle East and the next batch of corporate results.