Risk Tone Turned Cautious as Oil Stayed Elevated and Dollar Firmed

The Dollar Index held near recent highs, 99.68, after its latest run‑up, reflecting a combination of safe‑haven demand and US yield support. A stronger greenback kept pressure on risk assets and commodities priced in dollars, even as intraday swings in the major indices tempted short‑term dip‑buyers.

In the commodity markets, crude oil remained elevated after its recent surge, with prices consolidating near 77.20, near the end of the upper range, rather than extending vertically. Earlier in the session, profit‑taking knocked prices off the intraday highs, but ongoing concerns around supply disruptions and the Middle East backdrop kept a firm floor under the tape. Traders are now watching whether this pause resolves into another leg higher or a deeper mean‑reversion as volatility stays elevated.

Gold stayed firm but choppy, from $5100 to the upside of $5200, caught between strong safe‑haven and inflation‑hedge demand on one side and the headwind of a stronger dollar and higher real yields on the other. After its recent run toward record territory, the metal traded in a relatively wide intraday range but struggled to establish a decisive trend into the close. Elsewhere, industrial metals such as iron ore and copper were mostly range‑bound to softer, reflecting lingering concerns about global growth and uneven signals from China, with participants reluctant to add fresh directional risk ahead of clearer macro data.

In the FX space, the cautious risk sentiment and firm dollar kept a lid on high‑beta currencies. The Aussie and Loonie gave back some of their recent gains, with elevated oil prices helping to cushion the Loonie but not fully offsetting broader risk‑off flows. The medium‑term tone for the greenback remained supported by US yield differentials and its role as a defensive asset, limiting the scope for a more durable rebound in pro‑cyclical FX for now. Safe‑haven demand for the Swiss franc and yen stayed underpinned, while Sterling remained constrained by domestic growth worries and the Euro traded mixed, torn between softer regional data and the stronger dollar backdrop.