Risk sentiment stays mildly positive early Thursday as traders grow more hopeful about a U.S.-Iran peace deal after fresh signals from Washington and Tehran. Markets mostly ignored the hawkish Federal Open Market Committee (FOMC) Minutes while staying cautious ahead of the preliminary May Purchasing Managers Indexes (PMIs) from the Eurozone, the United Kingdom (UK), and the U.S. Meanwhile, softer PMIs from Japan, Australia, and India pressured Asia-Pacific stocks despite Wall Street’s strong Wednesday close.
Iran’s newly created Persian Gulf Strait Authority announced a controlled maritime zone in the Strait of Hormuz, requiring ships to seek approval before transit through waters also claimed by the United Arab Emirates (UAE) and Oman. Official reactions are still pending. Separately, Iran’s Foreign Ministry said it received and is reviewing U.S. proposals, while the Pentagon confirmed plans to send a senior delegation to Beijing before a possible visit to China by U.S. Defense Secretary Pete Hegseth.
Elsewhere, the FOMC Minutes showed many policymakers wanted to remove the easing bias from the policy statement. The vote ended 8-4, with one member supporting a 25 basis points (bps) rate cut. Stephen Miran, who later resigned from the Federal Reserve (Fed) to make way for a new Fed Chair, backed the cut, while three members favored removing the easing bias. Overall, the Minutes were seen as hawkish.
Against this backdrop, the U.S. Dollar Index (DXY) remained under pressure after retreating from a six-week high. The weaker U.S. Dollar helped EURUSD and GBPUSD recover despite economic concerns linked to the Iran war. USDJPY moved higher and stayed on track for weekly gains, while AUDUSD and NZDUSD weakened. USDCAD aimed for a third straight weekly rise as falling crude oil prices pressured Canada’s export outlook. Gold stayed weak and headed for a second weekly decline, while cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) extended gains for a second day. Asia-Pacific stocks also edged higher, although upside momentum remained limited despite strong Wall Street performance.
EURUSD trades without a clear direction early Thursday, swinging between gains and losses after a strong previous session, while sellers aim for a second straight weekly decline. Hawkish European Central Bank (ECB) comments fail to support buyers ahead of the Eurozone and U.S. Purchasing Managers Indexes (PMIs), as traders remain worried about economic and trade risks linked to the Iran-driven energy crisis and Donald Trump’s threat of heavy tariffs on Europe if trade deals are not accepted by July.
The ECB is still widely expected to raise interest rates on June 11, although Reuters sources said a July hike may come too soon. Deutsche Bank expects quarter-point rate hikes in June and September, which could push rates to 2.50%. ECB Governing Council member Olli Rehn also warned that rates may need to rise further in a worst-case scenario to protect credibility.
Unlike EURUSD, GBPUSD eases early Thursday and trims weekly gains as mostly weak UK updates weigh on sentiment. Meanwhile, USDJPY rebounds from the previous day’s first loss in eight sessions and heads for a second straight weekly gain, as Japan’s latest data fails to fully support Bank of Japan (BOJ) hawks while the U.S. Dollar struggles to stay firm.
Japan’s April exports rose 14.8% year-on-year (YoY), beating the 9.3% forecast, while the trade balance posted a 301.9 billion yen surplus versus expectations for a 29.7 billion yen deficit. However, crude oil imports plunged 64%, the sharpest drop since 1980, highlighting supply disruptions. Japan’s flash composite Purchasing Managers Index (PMI) for May eased to 51.1 from 52.2 as services activity stalled and selling price inflation hit a near 19-year high.
Still, BOJ board member Koeda backed more rate hikes, saying underlying inflation is already near 2% and warning that Middle East tensions could lift inflation further ahead of Friday’s Consumer Price Index (CPI) data.
In the UK, the Labour government announced fresh cost-of-living support after local election losses, including free bus travel for children and lower tariffs on some imported food products.
Bank of England (BOE) Governor Andrew Bailey said tighter financial conditions give policymakers more time to assess further rate hikes amid softer growth and labor market conditions. BOE policymaker Catherine Mann warned high inflation in late 2026 could affect 2027 wage deals, while Monetary Policy Committee (MPC) member Swati Dhingra suggested current policy restrictions may already be sufficient. BOE Deputy Governor Sarah Breeden also warned that prolonged Middle East tensions could require a stronger policy response.
Separately, The Times reported that Labour politician Wes Streeting may drop his Prime Minister (PM) bid in favor of Andy Burnham, who is increasingly seen as a strong challenger to PM Keir Starmer if he wins the Makerfield by-election.
Antipodean currencies trade mixed early Thursday as markets await key Purchasing Managers Indexes (PMIs) and fresh Iran-related updates. AUDUSD remains on track for a weekly loss after weak Australian data, while NZDUSD and USDCAD head toward weekly gains. Softer crude oil prices, a key factor for Canada’s export-driven economy, continue to support USDCAD.
Australia faced another weak session after the flash composite PMI showed a second contraction in three months, and business confidence dropped to pandemic-era lows. April labor market data added pressure, with unemployment rising to 4.5%, the highest since November 2021, while employment fell by 18,600 instead of the expected 17,500 increase. Although hours worked rose 0.8%, markets sharply lowered expectations for further Reserve Bank of Australia (RBA) tightening. The chances of an August rate hike dropped from 81% to 42%, while National Australia Bank delayed its RBA rate hike forecast from June to August. AUDUSD weakened after the data.
Meanwhile, New Zealand’s trade data remained strong as April exports increased and imports declined. The trade surplus jumped to 1.920 billion New Zealand dollars (NZD), well above the expected 0.842 billion NZD and the previous 0.698 billion NZD.
Crude oil posts mild gains early Thursday but remains on track for a weekly loss as markets grow more hopeful about a U.S.-Iran peace deal and possible easing of disruptions in the Strait of Hormuz, despite mixed geopolitical signals. Gold also heads for a second straight weekly loss, reversing from key support-turned-resistance near $4,555, as hawkish central bank expectations and weaker demand outlooks from major buyers India and China weigh on sentiment.
Earlier, crude oil saw heavy selling pressure. West Texas Intermediate (WTI) crude settled at $98.26, down $5.89, while Brent crude dropped $6.26 to $105.02. The decline reflected easing fears of major global supply disruptions. WTI holding below the $100 level is seen as supportive for inflation easing and central bank policy outlooks. Weekly crude oil inventories also fell by 7.863 million barrels, compared to expectations of a 2.942 million barrel decline.
Goldman Sachs said global oil inventories are falling at a record pace of 8.7 million barrels per day in May, while flows through the Strait of Hormuz are down to just 5% of normal levels. It added that Brent crude remains near $106 and is up more than 70% this year.
The U.S. Dollar’s struggle to stay firm, combined with optimism around a U.S.-Iran peace deal, supports a two-day winning streak in Bitcoin (BTC) and Ethereum (ETH), pointing to a potential weekly gain in these major digital assets.
Meanwhile, Asia-Pacific markets traded mixed on Thursday, supported by Wall Street gains but weighed down by weak Australian data and concerns over Japan’s economic outlook. Softer bond yields and lower oil prices also helped sentiment after Middle East optimism lifted U.S. stocks overnight.
Chinese markets underperform despite fresh liquidity support from the People’s Bank of China (PBoC). Mainland shares rise only slightly, while Hong Kong’s Hang Seng turns negative.
In the U.S., major stock indexes close sharply higher, led by the Russell 2000 with a 2.56% gain. The Nasdaq Composite rises 1.54%, the S&P 500 gains 1.08%, and the Dow Jones Industrial Average climbs 1.31%. Within the Dow, Goldman Sachs and Nike lead gains, while Chevron and Walmart lag. Goldman Sachs is expected to underwrite the upcoming OpenAI Initial Public Offering (IPO). Overall, 22 Dow stocks advance while eight decline.
On the corporate side, Nvidia beats expectations on both revenue and earnings, announces an $80 billion buyback program, and raises its quarterly dividend from $0.01 to $0.25, although its shares trade flat to lower afterward. Meanwhile, SpaceX files its long-awaited S-1 document for a Nasdaq IPO under the ticker SPCX, with Elon Musk retaining 85.1% voting control through a dual-class structure. U.S. equity futures dip early in Asia trading before recovering later in the session.
May’s Flash PMIs (Purchasing Managers’ Index, Flash PMI) for the Eurozone (European Union using euro currency), the United Kingdom (UK), and the United States (US) will be released along with the preliminary European Union (EU) Consumer Confidence data for the same month. These key updates will shape Thursday’s economic calendar. Also important will be developments in the United States–Iran peace deal and vessel movement through the Strait of Hormuz, a major global oil shipping route. At the same time, speeches from mid-tier Federal Reserve (Fed) and European Central Bank (ECB) officials will also keep short-term traders active.
Due to rising optimism about a US–Iran peace deal and limited market reaction to more hawkish Fed signals, along with mixed PMIs, the US Dollar (USD), also called Greenback, may face more downside pressure. This possible weakness in the USD could help EURUSD and GBPUSD move toward weekly gains.
That said, USDJPY may hold its early gains and could see a second straight weekly rise. AUDUSD may recover part of its weekly losses, while NZDUSD could finish the week positively. USDCAD may still hold weekly gains, supported by possible weakness in Crude Oil prices. Gold may remain weak if it stays below the $4,555 resistance level.
In other markets, BTC (Bitcoin) and ETH (Ethereum) are likely to end the week with gains. The Wall Street (US stock market benchmark) indices may also trade higher, supported by strong NVIDIA (NVIDIA Corporation) earnings results.
