Oil prices held nearly steady on Friday, as hopes for an imminent peace deal between Russia and Ukraine faded, putting prices on track for their first weekly gain in three weeks.

Brent crude futures slipped 17 cents, or 0.25%, to $67.50 a barrel by 1000 GMT. US West Texas Intermediate (WTI) crude fell 13 cents, or 0.2%, to $63.39.

Both contracts had gained more than 1% in the previous session. Brent has risen 2.8% so far this week, while WTI is up 1%.

Giovanni Staunovo, commodity analyst at UBS, said: “Everyone is waiting for the next move from President Trump. In the coming days, it seems nothing will happen.”

The war, now in its third and a half year, showed no let-up this week. Russia launched an airstrike near Ukraine’s border with the European Union on Thursday, while Ukraine said it struck a Russian oil refinery and pumping station in Unecha, a vital part of the Druzhba pipeline that carries Russian oil to Europe. Hungary said supplies through the line had stopped.

Trump is seeking to arrange a summit between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky as part of his mediation efforts to reach a peace deal.

But arranging such a meeting appears difficult, while discussions over possible security guarantees are facing obstacles, analysts at ING wrote in a client note on Friday. They added: “The lower the chances of a ceasefire, the higher the risk of tougher US sanctions on Russia.”

Meanwhile, American and European planners presented military options to their national security advisers following the first direct meeting between US and Russian leaders since the invasion of Ukraine.

Putin has demanded that Ukraine abandon the entire eastern Donbas region, renounce ambitions to join NATO, and keep Western forces out of the country, according to sources who spoke to Reuters.

Trump has pledged to protect Ukraine under any deal to end the war, while Zelensky rejected any withdrawal from internationally recognized Ukrainian territory.

Larger-than-expected decline in US oil inventories

Oil prices also drew support from a bigger-than-expected drop in US crude stockpiles last week, signaling firm demand. Inventories fell by 6 million barrels in the week ending August 15, the US Energy Information Administration said on Wednesday, compared with analysts’ forecasts for a draw of just 1.8 million barrels.

This was partly offset by weak German economic data, which showed the eurozone’s largest economy shrank by 0.3% in the second quarter, raising concerns about oil demand.

Investors were also watching the Jackson Hole Economic Symposium in Wyoming for signals on a potential US interest rate cut next month. The annual gathering of top central bankers began on Thursday, with Fed Chair Jerome Powell scheduled to deliver his speech on Friday.

A rate cut could stimulate economic growth and boost oil demand, potentially supporting prices.

The US dollar hovered near a two-week high against the euro and the British pound on Friday, as investors scaled back bets on an interest rate cut ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium.

The euro and the British pound recorded their weakest levels since early August, retreating by 0.1% to $1.1597 and $1.3408 respectively.

Earlier signs of weakness in the US labor market had boosted hopes for lower borrowing costs next month, but those expectations receded following stronger-than-expected economic data and cautious comments from Federal Reserve officials.

According to CME’s FedWatch tool, traders are currently pricing in a 73% probability of a 25-basis-point rate cut in September, down from 85.4% a week earlier.

Jane Foley, head of FX strategy at Rabobank, said: “The dollar is reflecting the risk that Powell sticks to his cautious stance and turns more hawkish.”

The dollar index, which measures the US currency against six major peers, rose 0.1% to 98.71, on track for a weekly gain of 0.9%, ending a two-week losing streak.

Federal Reserve officials appeared hesitant on Thursday regarding a rate cut next month, setting the stage for Powell’s speech scheduled at 10 a.m. Eastern (1400 GMT) during the annual conference in Jackson Hole, Wyoming, which began on Thursday.

Austan Goolsbee, president of the Chicago Fed, said the upcoming meeting was “open” and could bring a policy change, but he pointed to mixed economic data and unexpectedly high inflation readings that made him cautious about an imminent cut.

Charu Chanana, head of investment strategy at Saxo, added: “With inflation and jobs data still due before the September meeting, Powell has every reason to be patient and maintain flexibility.”

Analysts at Bank of America Global Research said the dollar has limited upside in the near term ahead of Jackson Hole, but maintained a bearish longer-term view given growing stagflation risks in the US economy. They noted: “The stagflationary environment, tariffs, and concerns over Fed independence and US institutions are all factors likely to drive the dollar lower eventually,” raising their year-end forecast for the euro to $1.20 from $1.17 previously.

The euro has gained 12% so far in 2025, supported by dollar weakness.

Elsewhere, the yen slipped to 148.56 per dollar, heading for a weekly loss of 0.9%. Data showed Japan’s core inflation slowed for the second consecutive month in July but remained above the central bank’s 2% target, keeping expectations of a rate hike alive in the coming months.

Japanese government bond yields tracked US Treasuries higher, with the 30-year yield hitting a fresh record high on Friday. The US 30-year Treasury yield stood at 4.9285% after a two-basis-point rise on Thursday, while the two-year yield, more sensitive to rate expectations, held at 3.79% after climbing 5 basis points in the previous session.

The Swedish krona and Norwegian crown slipped 0.2% against the dollar, while the Swiss franc held steady at 0.8093.

Gold prices fell in European markets on Thursday, extending losses for the second consecutive session and approaching a three-week low, pressured by the stronger US dollar against a basket of global currencies after the release of strong US economic data.

The data reduced the likelihood of a Federal Reserve interest rate cut in September, and in order to re-price these expectations, markets are awaiting a speech from Fed Chair Jerome Powell later today at the annual Jackson Hole Economic Symposium.

Price Overview

• Gold prices today: Spot gold fell by 0.4% to $3,325.46, down from an opening level of $3,338.83, after recording a session high of $3,340.70.

• At Wednesday’s settlement, gold lost 0.3%, resuming losses after a one-day pause, pressured by the rising dollar and US Treasury yields.

US Dollar

The dollar index rose by 0.2% on Friday, extending gains for a second straight session to the highest level in nearly two weeks at 98.83, reflecting continued strength of the US currency against a basket of major and minor peers.

This advance was driven by renewed demand for the US dollar as the best available investment in FX markets, especially following strong US sectoral data for August, confirming that the world’s largest economy continues to grow in Q3 at a better-than-expected pace, despite concerns over President Donald Trump’s aggressive trade policies.

US Interest Rates

• According to CME’s FedWatch tool: market pricing for a 25 basis point rate cut at the September FOMC meeting fell from 81% to 75%, while expectations for no change rose from 19% to 25%.

• Market pricing for a 25 bp cut in October also declined from 91% to 85%, with no-change expectations up from 9% to 15%.

Jerome Powell

Powell’s speech at Jackson Hole is scheduled for 15:00 GMT on Friday. Markets will watch closely for signals on the Fed’s policy path and the outlook for US interest rates.

Gold Outlook

• Tim Waterer, chief market analyst at KCM Trade, said: “With peace prospects between Russia and Ukraine still on the table and renewed buying of the US dollar, gold faces headwinds.”

• He added: “If Powell’s comments at Jackson Hole are interpreted as dovish, the dollar could weaken, allowing gold prices to rise again.”

SPDR Holdings

SPDR Gold Trust, the world’s largest gold-backed ETF, reported a 1.44 metric ton outflow on Thursday — its third consecutive daily decline — bringing total holdings down to 956.77 metric tons, the lowest since August 6.

The euro slipped at the open of European trading on Friday to a two-week low against the US dollar, extending losses for a second consecutive session and heading for a weekly decline. The move came as investors focused on buying the greenback as the best available investment, particularly after expectations of a Federal Reserve rate cut in September receded.

Expectations for a European Central Bank rate cut in September have also weakened, given entrenched inflationary pressures. To reprice those odds, investors are awaiting ECB President Christine Lagarde’s speech on Saturday at the annual Jackson Hole symposium.

Price Overview

Euro exchange rate today: The euro fell 0.2% to $1.1583, its lowest since August 6, from an opening level of $1.1606, after touching a high of $1.1617.

On Thursday, the euro closed down 0.4% against the dollar, its third loss in the past four sessions, following strong US economic data.

Weekly Performance

For the week to date, the euro is down more than 1% against the US dollar, on track for its first weekly loss in three weeks.

US Dollar

The dollar index rose 0.2% on Friday, extending gains for a second session to reach a two-week high at 98.83 points, reflecting continued strength of the US currency against a basket of majors and minors.

This strength has been fueled by renewed demand for the dollar as the best available investment in FX markets, particularly after robust US data in August confirmed that the world’s largest economy continues to grow at a stronger-than-expected pace despite headwinds from President Donald Trump’s aggressive trade policies.

US Interest Rates

According to CME FedWatch: odds of a 25-bp Fed rate cut in September fell from 81% to 75%, while expectations of leaving rates unchanged rose from 19% to 25%.

Markets are now awaiting Fed Chair Jerome Powell’s speech later on Friday at the Jackson Hole symposium to reprice those expectations.

European Interest Rates

Recent inflation data in the euro area confirmed entrenched price pressures facing ECB policymakers.

According to Reuters sources, a clear majority at the ECB’s latest meeting favored holding rates steady in September, for the second meeting in a row.

Money markets are currently pricing less than a 30% chance of a 25-bp cut in September.

Investors will be closely watching Lagarde’s speech at Jackson Hole on Saturday for additional signals.

Outlook for the Euro

At Economies.com, we expect that if Powell’s comments turn out more hawkish than markets currently anticipate, the odds of a September rate cut will recede further, which could drive the euro to extend losses against the US dollar.