US President Donald Trump said the Iran conflict is close to ending and described the mission as largely successful within a 2–3 week timeline, but his tone stayed firm. He warned that if no agreement is reached, the US could strike Iran “extremely hard,” including targeting electricity and possibly oil infrastructure. He mentioned talks with what he called more moderate Iranian leaders, but did not confirm a ceasefire, no signal of withdrawal, and no indication of ground troop deployment, showing continued pressure rather than de-escalation.
Markets had expected a softer message after two days of risk-on moves and falling oil prices, but that did not happen. The US Dollar (USD) strengthened, equities moved lower, oil prices rose, and gold declined, reflecting a shift to risk-off sentiment. Focus remains on the Strait of Hormuz, where uncertainty over reopening continues to pose risks to energy supply and keeps inflation expectations elevated. At the same time, possible changes to steel and aluminium tariffs could simplify rules but increase import costs, adding to inflation pressure.
Recent data showed steady economic resilience. February retail sales rose 0.6% versus 0.5% expected, recovering from a revised -0.1%, with strong demand in health care and clothing. March ADP employment came in at +62K versus +40K expected, with the prior revised to +66K, marking a second stable reading and easing pressure on the Fed, supporting the case for holding or possibly raising rates. The Atlanta Fed GDPNow estimate slipped to 1.9% from 2.0%, while January business inventories fell -0.1% versus +0.1% expected.
Manufacturing data showed moderate but uneven growth. The ISM Manufacturing PMI for March came at 52.7 versus 52.5 expected, marking a third month of expansion, but new orders slowed, employment remained weak, and price pressures increased. The S&P Global Manufacturing PMI rose to 52.3, marking eight straight months of expansion and a steady growth pace. Wage growth held at 4.5% for job stayers and rose to 6.6% for job changers, pointing to stable income conditions ahead of NFP, where expectations are +65K jobs and a 4.4% unemployment rate.
Consumer strength remains a key support. The U.S. retail sales showed broad gains, with annual growth rising to 3.7%, led by health care, clothing, online retail, and food services, though some weakness remained in furniture and food stores. Lower inventories combined with rising sales suggest future restocking could support GDP growth.
Energy data added to supply concerns. EIA reported crude oil inventories rose by 5,451K versus 814K expected, while the IEA warned April supply losses could be double those of March.
In currency markets, the US Dollar Index (DXY) rebounded from a weekly low and ended a two-day decline, pushing EURUSD, GBPUSD, AUDUSD, and NZDUSD into their first losses in three sessions. USDJPY extended gains, and USDCAD moved higher after recent weakness. Oil surged, gold dropped more than 3.0%, and Bitcoin (BTC) and Ethereum (ETH) declined along with Asia-Pacific equities, even as stock markets closed higher.
EURUSD snaps two-day rebound, pares weekly gains
Risk aversion, firm US data, and hawkish Federal Reserve (Fed) signals lift the US Dollar (USD) early Thursday, weighing on major currencies, including the Euro. As a result, EURUSD drops for the first time in three days, trimming weekly gains and attracting sellers. Weak recent European Union (EU) data and concerns that the region is more vulnerable to the energy supply crisis than the US also pressure the pair, ahead of mid-tier US data, Friday’s employment report, and the Good Friday holiday in major markets. That said, the Eurozone’s March final Manufacturing Purchasing Managers Index (PMI) came in at 51.6 versus 51.4 preliminary.
GBPUSD follows EURUSD lower, pressured by weak United Kingdom (UK) data and concerns about the country’s economic transition during the energy crisis. As a result, GBPUSD posts its first daily loss in three sessions and moves toward a second straight weekly decline.
At the same time, USDJPY extends its rebound from a weekly low, overlooking the hawkish Bank of Japan (BoJ) stance and the Japanese Yen’s (JPY) safe-haven appeal. A BoJ policymaker also pointed out the difficulty of handling stagflation. Meanwhile, Bank of England (BoE) Governor Andrew Bailey said markets may be overpricing rate hikes, and the UK March final Purchasing Managers Index (PMI) came in at 51.0 compared to 51.4 preliminary.
Sour sentiment drags commodity-linked currencies lower, hitting the Australian Dollar (AUD), New Zealand Dollar (NZD), and Canadian Dollar (CAD). As a result, AUDUSD, NZDUSD, and USDCAD struggle to benefit from hawkish central bank signals amid stagflation concerns and higher crude oil prices, a key Canadian export. Australia reported a February trade surplus above AUD 5 billion, driven by gold exports, but weaker imports pointed to softer domestic demand. Meanwhile, Canada’s S&P Global Manufacturing PMI fell to 50.0 from 51.0.
WTI Crude Oil jumps over 7.0% while spot Gold (XAUUSD) falls more than 3.0%, highlighting volatility in commodity markets. Strong US data, a firmer US Dollar (USD), and Iran-related tensions are the main drivers, supporting a hawkish Federal Reserve (Fed) outlook. Energy supply concerns also weigh, with the EIA reporting crude inventories up 5,451K versus 814K expected, and the IEA warning that April supply losses could be twice as high as in March.
Cryptocurrencies and equities came under pressure amid a stronger US Dollar (USD) and risk-off sentiment, showing a mixed market despite Wall Street closing higher. US equities opened higher on hopes of easing tensions and a possible Hormuz reopening, marking a second day of gains, but momentum faded later. Major indices still closed up, including the S&P 500, Nasdaq Composite, Russell 2000, Dow Jones Industrial Average, and TSX Composite. Tech memory stocks rebounded, while Nike fell 15% on weak guidance and RH dropped 19.3% amid housing market weakness. Exxon declined 5.2%, reflecting expectations of easing tensions. Stocks ended higher for a second straight session, led by the Nasdaq, followed by the S&P 500 and Russell 2000, putting weekly performance on track to end a five-week losing streak if gains hold.
In contrast, Asia-Pacific shares edged lower, while bond yields initially fell but rose into the close, with the 10-year yield at 4.334% and the 2-year yield at 3.813%. Bitcoin (BTC) and Ethereum (ETH) also posted intraday losses, reflecting weakness in risk assets.
Swiss inflation and trade data, along with reports from the US and Canada, will set the stage ahead of the weekly US Jobless Claims and the monthly Challenger Job Cuts, giving intraday traders key insights. However, market attention is likely to focus on Trump’s stance regarding US boots on the ground in Iran, with Fed commentary and global pressure to reopen the Strait of Hormuz also shaping trading ahead of the long weekend and Good Friday holiday.
Amid persistent risk aversion, the US Dollar (USD) may extend its recent recovery, weighing on major currency pairs such as EURUSD, GBPUSD, USDJPY, and the Antipodeans. Gold could face a pullback, while crude oil is expected to remain firm. Equities and cryptocurrencies are likely to see a weaker session unless Trump signals a retreat from Iran.
From a policy perspective, recent data eases some downside risks in employment but does not indicate a strong acceleration. Wage growth remained steady at 4.5% for job stayers, while job changers saw a modest increase to 6.6%, suggesting resilience in labor income.
Looking ahead to Friday’s Nonfarm Payrolls (NFP), the ADP report provides a modestly positive signal, following last month’s sharp -94K payroll surprise. With consensus expecting a +65K rebound and a steady 4.4% unemployment rate, the ADP data points to a gradual labor market recovery—stable but not strong enough to materially alter the broader Fed narrative.
May the trading luck be with you!
