Market mood is mildly positive early Thursday as traders wait for U.S.-Iran ceasefire talks. Iran has shown readiness to engage, while Donald Trump is pushing for a deal that could reopen the Strait of Hormuz. At the same time, hawkish central bank signals and fresh U.S.-China political and trade updates are keeping optimism cautious.
Donald Trump aims to end the Iran conflict quickly, targeting a four to six week timeline, according to The Wall Street Journal. He believes the situation is nearing its final stage and is planning, including a mid-May meeting with Xi Jinping, assuming tensions ease. Trump says Iran wants a deal and is already negotiating indirectly, but is hesitant to admit it publicly, also noting leadership pressure inside Iran.
Iran’s Foreign Minister Abbas Araghchi maintains that Iran does not want war but demands a permanent resolution, guarantees against future conflict, and compensation. He stressed that indirect message exchanges do not mean formal negotiations and confirmed that Tehran is still reviewing proposals without agreeing to direct talks.
The White House, through Press Secretary Karoline Leavitt, says the US is close to meeting its objectives, with operations progressing faster than expected and Iran’s attacks declining. Officials believe Iran is looking for an exit, and recent discussions have been productive, but warnings remain that failure to agree could lead to serious escalation within the same four to six-week window.
Although Donald Trump prefers a short conflict, developments suggest escalation risks are growing, with his five-day deadline nearing and signs of possible ground operations increasing.
On the global side, US-China relations are also in focus. Insights from The Wall Street Journal indicate China sees US policy on Taiwan becoming more flexible under Trump. A delayed but important meeting between Donald Trump and Xi Jinping is now set for May 14–15 in Beijing.
The Iran–US–Israel situation shows a contrast between public statements and behind-the-scenes diplomacy. Iran continues strong public messaging, rejecting direct talks and demanding strict conditions, while indirect channels through countries like Pakistan and Turkey suggest talks are still possible. Leaders like Mohammad-Bagher Ghalibaf have warned that any ground invasion would trigger severe escalation, including threats to key routes like the Bab el-Mandeb Strait. Iran is also controlling access to the Strait of Hormuz, allowing neutral ships while restricting others, using it as leverage without fully blocking flows.
The US is combining pressure with diplomacy, claiming progress while keeping strong warnings in place. Reports suggest certain Iranian officials were temporarily removed from target lists to allow room for talks, increasing pressure on decision-making. At the same time, Israel is intensifying strikes to maximize short-term military impact.
Overall, the situation remains highly uncertain, with both sides balancing military pressure and limited diplomacy. The coming days are crucial for determining whether tensions ease or escalate further.
US February import prices rose 1.3% versus 0.5% expected, the highest since March 2022, with nonfuel imports up 1.1%. Export prices increased 1.5% versus 0.5% expected, the strongest since May 2022, with annual growth at 3.5%. Gains were broad across goods like machinery, semiconductors, metals, and consumer products, pointing to rising inflation pressures. These figures do not include tariff effects.
US Treasury yields declined, with the 2-year at 3.883% down 5.3 basis points bps, 5-year at 3.971% down 5.9 bps, 10-year at 4.326% down 6.6 bps, and 30-year at 4.894% down 4.5 bps, following weak demand in recent Treasury auctions, including a $70 billion 5-year sale.
Vladimir Putin announced a ban on exporting gold bars above 100 grams from May 1, 2026. Deputy Prime Minister Alexander Novak said this aims to reduce illegal economic activity, while Deputy Finance Minister Alexei Moiseev noted gold is increasingly used for illicit transactions. Individuals can carry only up to 100 grams, worth about $15,000.
Amid these catalysts, the U.S. Dollar Index (DXY) edges higher, up for the third consecutive day, while the EURUSD remains pressured despite lacking downside momentum after a two-day downtrend. Meanwhile, GBPUSD drifts lower, and the USDJPY is modestly up, whereas AUDUSD and NZDUSD both hold lower grounds while USDCAD rises for the fourth consecutive day to hit a fresh two-month high. Elsewhere, crude oil extends the previous day’s rebound, while gold prices stall their two-day winning streak. That said, Asia-Pacific shares drift lower despite Wall Street’s upbeat closing, whereas Bitcoin and Ethereum both post modest losses, reversing the previous day’s gains amid mixed sentiment.
The EURUSD pair fell for two straight days due to a mix of a strong US Dollar, rising geopolitical tensions, and the European Union (EU) facing trade conflicts with major economies. This decline happened even though the European Central Bank (ECB) officials continued giving hawkish signals and EU data remained relatively stable.
However, a cautious market mood ahead of the U.S.-Iran talks and the weekly US jobless claims is now slowing the selling pressure, although sellers remain in control of the pair.
Unlike EURUSD, GBPUSD is falling for the third straight day, despite strong UK inflation data and hawkish signals from the Bank of England (BOE). The decline is mainly due to a stronger US Dollar and market doubts about the BOE’s ability to support the economy amid growing macroeconomic concerns. Comments from Megan Greene also showed more concern about inflation than growth, although she did not back a rate hike this month.
At the same time, USDJPY is moving slightly higher, continuing its two-day rise. However, gains are being challenged by hawkish signals from the Bank of Japan (BOJ) and the Japanese Yen (JPY) acting as a safe-haven asset, especially as risk aversion eases ahead of the U.S.-Iran talks.
The Bank of Japan (BOJ) has also introduced new core Consumer Price Index (CPI) measures under “Indicators for Core CPI,” including trimmed mean, weighted median, and diffusion index. These measures support the BOJ’s view that inflation is still above the 2% target, strengthening the case for further monetary tightening.
Strong US Dollar and rising concerns around Iran, along with fresh U.S.-China developments discussed earlier, are pushing AUDUSD and NZDUSD lower.
In contrast, USDCAD is rising for the fourth straight day, reaching a two-month high, even though crude oil prices—Canada’s key export—are strong.
The Reserve Bank of Australia RBA (Reserve Bank of Australia) warned that the Middle East conflict could lift inflation and slow growth. Assistant Governor Christopher Kent said higher energy prices are adding inflation pressure. Australia’s Consumer Price Index (CPI) increased 3.7% year-on-year, while the trimmed mean stands at 3.3% annually.
Oil prices are moving higher again as traders rebuild a geopolitical risk premium, expecting the conflict to escalate rather than ease. The Energy Information Administration (EIA) reported that US crude inventories rose by 6926K barrels versus 477K expected, but this has limited impact now as around 9.5 million barrels per day mbpd are shut in, and nearly 15 mbpd cannot pass through the Strait of Hormuz.
Oil remains highly sensitive to headlines, dropping earlier on hopes of negotiations and then rebounding as military tensions increased. Messaging is still mixed, with Abbas Araghchi denying talks while the US claims otherwise. At the same time, conflict intensity is rising, with the US Central Command CENTCOM (Central Command) reporting more than 10,000 strikes and heavy damage to Iran’s weapons infrastructure, alongside fresh Israeli airstrikes and continued Iranian responses.
Meanwhile, gold prices have recorded their first daily drop in three sessions, reversing the early-week rebound from the 200-day SMA (Simple Moving Average). The decline is driven by a stronger US Dollar and cautious optimism, along with gold failing to break above the $4,610 level, which has turned from support into resistance.
Asia-Pacific stocks are trading lower despite a strong close on Wall Street, while Bitcoin and Ethereum are slightly down, giving back the previous day’s gains as overall sentiment remains mixed.
In contrast, US equities moved higher, supported by optimism around a possible ceasefire. The Dow Jones Industrial Average (DJIA) rose 0.66%, the S&P 500 Index (Standard and Poor’s 500 Index) gained 0.54%, and the Nasdaq Composite IXIC (Nasdaq Composite Index) climbed 0.77%, while the US Dollar strengthened even as bond yields declined.
U.S. jobless claims and other mid-tier data will keep traders engaged on Thursday, while central bank expectations will continue to guide market direction. Even so, updates on the Iran conflict and global pressure to fully reopen the Strait of Hormuz remain the key drivers to watch.
Markets are closely tracking risks around important locations like Kharg Island and the Strait of Hormuz, as any disruption could directly affect global energy supply. Because of this uncertainty, gold and major foreign exchange FX pairs are mostly steady, reflecting cautious trading.
At the same time, rising expectations of Federal Reserve (Fed) rate hikes, along with the US Dollar’s safe-haven appeal, are supporting the Greenback. This increases the chances of further weakness in major currencies and Antipodeans. Meanwhile, crude oil prices may continue to rise amid mixed sentiment, whereas cryptocurrencies and gold could face pressure. Equity markets may also drift lower, with EURUSD likely to remain weak.
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