- Tensions continue to build over Iran as Trump sets deadline for nuclear deal
- Dollar climbs to one-month peak, eyes US GDP and PCE inflation data
- Oil surges to 6-month high but gold can barely grip onto $5,000 handle
- Yen flounders again, equities trade mixed
Trump Ups the Pressure on Iran
President Trump is not giving up on his ambition to secure a nuclear agreement with Iran, setting a deadline of 10 to 15 days to reach a “meaningful deal” following “very good” talks in Geneva this week. However, despite the progress, the US has continued to amass its forces in the Middle East, including two aircraft carriers, with Trump threatening that “bad things” may happen if Tehran does not agree to Washington’s terms for a deal.
The Wall Street Journal is reporting that Trump is weighing the option of limited strikes against Iran if Tehran rejects his demands, raising the risk of retaliation and a major escalation in the region.
Oil Boosted by Supply Disruption Fears
Oil futures jumped on the headlines, taking their weekly gains to more than 5.5%, as a military conflict with Iran could cause major disruptions to the country’s oil exports. At worst, Iran could block vessels from passing through the Strait of Hormuz, potentially cutting off about 20% of the world’s oil supply.
were last trading at $66.26 a barrel after earlier briefly surpassing $67.00. A large drop in US crude inventories last week as per yesterday’s EIA report further aided oil’s bullish momentum. Though, with OPEC+ potentially resuming its output increases in April, further upside will depend entirely on how the US-Iran standoff is resolved.
Gold’s Rebound Held Back by a Stronger Dollar
has also been benefiting from the heightened geopolitical frictions. Fears of a possible war in the Middle East helped the precious metal stage a mid-week recovery. But the $5,000-$5,100 region is once again proving to be a tough resistance point, with gold struggling to overcome it.
A resurgent is putting a lid on gold’s gains and a close above $5,042 is needed today if it’s going to end the week in positive territory.
Dollar Has Good Week, Pound, and Yen Lag
As for the dollar, it’s still revelling from this week’s setback in dovish expectations following the hawkish and the run of upbeat US economic indicators, including yesterday’s solid weekly numbers. Nevertheless, the extent of the greenback’s bounce back is somewhat puzzling given that total rate cut expectations by December only fell back a few basis points following the boost from last Friday’s soft report.
Yet, the underperformance of and the this week have lifted the dollar index to its highest since January 23. The pound took a knock from this week’s weak UK jobs and data, but there is good support at $1.3430, and after today’s better-than-expected flash and figures, cable is a touch firmer.
The euro is flat despite Germany’s flash PMIs for February also topping the forecasts. But the yen remains under pressure as Japan’s rate eased from 2.4% y/y to 2.0% y/y in January, casting doubt on the Bank of Japan’s concerns about sticky inflation.
The focus later today will shift to the advance and inflation reports out of the US. Economic growth in the world’s largest economy likely slowed in Q4, while the is projected to have ticked up from 2.8% y/y to 2.9% y/y in December. Any upside surprises would add more fuel to the dollar’s engines.
A Tepid Rebound on Wall Street
Equity traders will also be keeping an eye on the data while being on standby for the possibility that the US Supreme Court issues its opinion on the legality of Trump’s tariffs. In the meantime, sentiment seems to have improved from overnight when most Asian indices followed Wall Street in ending lower, as European markets are in the green and US futures have turned positive too.
A disappointing earnings outlook for 2026 by Walmart dragged the lower on Thursday, although it’s still on course to snap its two-week losing streak. The , meanwhile, is headed for its first weekly gain in four weeks, even as most Big Tech stocks attempt an unconvincing rebound.
