The dollar index rose toward 99.5 on Monday, gaining for a fourth consecutive session as investors prepared for the upcoming Federal Reserve policy meeting while assessing the impact of surging oil prices. Markets are currently pricing in an 86% probability that the Fed will raise its policy rate by 25 basis points on Wednesday, with another hike expected later this year. Data released Friday showed US consumer inflation held steady at 3.4% in August, matching July’s reading and market expectations, while underlying inflation came in above forecasts as core CPI rose 0.3% month-on-month. US producer prices also accelerated in August, while labor-market data pointed to continued resilience in employment. Higher oil prices added further inflationary pressure after Saudi Arabia shut down the critical East-West pipeline, which provides an alternative route around the Strait of Hormuz.

The Nikkei 225 Index fell 1.7% to below 63,000 on Monday, hitting a six-week low and tracking declines in US stock futures amid rising concerns over the safety of artificial intelligence development. On Saturday, Anthropic CEO Dario Amodei called on AI companies to slow the development of their most advanced models due to safety risks, while pledging to introduce additional safeguards at the company. Investors also faced surging oil prices after Saudi Arabia shut down the critical East-West pipeline, which provides an alternative route to the Strait of Hormuz. Higher energy prices strengthened expectations for tighter monetary policy, with both the US Federal Reserve and the Bank of Japan expected to raise interest rates this week. Tech and AI-related stocks led the losses, with Kioxia Holdings (-8.6%), SoftBank Group (-12%), Advantest (-4.5%), Taiyo Yuden (-8.3%) and Tokyo Electron (-2.6%) posting sharp declines.

Gold struggled near $4,300 an ounce on Monday after declining for three straight weeks, weighed down by surging oil prices and bets on tighter Federal Reserve monetary policy. Oil prices jumped toward four-month highs on Monday after Saudi Arabia closed a key pipeline that was used to bypass the Strait of Hormuz following drone attacks. The protracted Middle East crisis has delivered an inflationary jolt to the global economy, reinforcing a hawkish outlook on interest rates. Markets are currently pricing in around an 86% chance that the Fed will raise its policy rate by 25 basis points on Wednesday. Data on Friday showed US consumer inflation steadied at 3.4% in August, the same as in July and in line with forecasts, while monthly CPI rose 0.4%, the strongest increase in three months. US producer prices also accelerated in August as the Iran war pushed wholesale energy costs higher, while labor market data pointed to continued resilience in employment.

US stock futures fell on Monday amid rising concerns over the safety of artificial intelligence development, while investors turned their attention to the Federal Reserve’s policy meeting this week. On Saturday, Anthropic CEO Dario Amodei said AI companies should slow the pace of development for their most advanced models due to safety risks, while pledging to implement additional safeguards at the company. Meanwhile, OpenAI CEO Sam Altman said the ChatGPT developer does not plan to go public this year. On the monetary policy front, markets are pricing in an approximately 86% probability of a Fed rate hike on Wednesday, as elevated energy prices add to inflationary pressures. Oil prices climbed further on Monday after Saudi Arabia shut a key pipeline used to bypass the Strait of Hormuz following drone attacks. Rallying oil prices weighed on major US averages last week, with the Dow falling 1.57%, while the S&P 500 and Nasdaq Composite declined 0.8% and 0.66%, respectively.

New Zealand’s BusinessNZ Performance of Services Index increased to 51.2 in August 2026 from 50.6 in July, marking the third expansion in the services sector and the highest since December 2025. The latest reading matched the December 2025 figure, which was the strongest growth since September 2023, as two of the five sub-indices remained in expansion territory, with new orders (55.2 vs 52.8) recording the strongest reading, followed by stocks (50.8 vs 51.7). Meanwhile, contractions were seen in supplier deliveries (49.0 vs 48.4), employment (49.4 vs 48.5), and activity/sales (49.4 vs 50.4). The latest reading highlighted that cost-of-living pressures, interest rates, and election uncertainty remain front of mind for many. Sentiment was notably softer than in July, with 60.8% of comments negative. “It’s encouraging to see the PSI post its strongest reading since returning to growth, though at 51.2, this remains a fragile recovery,” BusinessNZ CEO Katherine Rich said.

The potential for constructive dialogue regarding tanker flows between the GCC and Iran next week halted the surge in oil and gas prices at a time that financial markets fret over the inflationary outlook. Outcomes will impact global borrowing costs as the Federal Reserve sets interest rates. For economic data, the US will release retail sales, trade terms, and industrial production. Monetary policy announcements are also taking the spotlight in the UK and Japan. A busy week of data in the UK features its inflation, wages, and retail sales, while Germany publish its ZEW confidence indicator and the Euro Area will post its goods trade and industrial production. A series of key data for China includes industrial production, retail sales, unemployment, housing prices, and credit aggregates. Lastly, BRICS nations are due to meet.