Market sentiment stays unclear early Friday as traders face mixed signals over a possible Iran peace deal. U.S. President Donald Trump rejected a nuclear option but warned of strong action if conditions worsen. Israel may slow attacks on Lebanon, while Iran may reopen the Strait of Hormuz but still demands passage fees and sticks to its 10-point plan before U.S.-Iran talks in Islamabad, Pakistan, on Saturday.
At the same time, U.S. data gives mixed signals. The Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve (Fed) preferred inflation gauge, came mixed, while a weaker Gross Domestic Product (GDP) for Q4 and slightly higher Jobless Claims challenge the Fed’s hawkish stance and pressure the U.S. Dollar. Warnings from the International Monetary Fund (IMF) and the Asian Development Bank (ADB) show little improvement in the Middle East despite ongoing talks. Traders also remain cautious ahead of key data, including the U.S. Consumer Price Index (CPI), University of Michigan (UoM) Consumer Sentiment Index, Inflation Expectations, and Factory Orders.
Iran denied sending a delegation to Islamabad and said it will not join talks until a ceasefire in Lebanon is reached, keeping uncertainty high. Meanwhile, a Senate Banking Committee hearing for Fed nominee Kevin Warsh was delayed due to missing paperwork, reducing near-term policy uncertainty and keeping leadership unchanged.
The Asian Development Bank (ADB) warned that ongoing Middle East disruptions could slow growth in Developing Asia and the Pacific to 4.7% in 2026 from 5.4%, while inflation may rise to 5.6%. Similarly, the International Monetary Fund (IMF) warned that the Iran conflict raises global stagflation risks by increasing energy costs and slowing growth, acting as a negative supply shock.
Recent U.S. data showed the PCE Price Index at 2.8% year-on-year, matching expectations, while real disposable income fell 0.5%. Final Q4 GDP came at 0.5% versus 0.7% expected, revised lower due to weaker investment. Initial Jobless Claims rose to 219K versus 210K expected, with the four-week average at 209.5K.
U.S. authorities also addressed rising artificial intelligence (AI) risks in finance. Treasury Secretary Scott Bessent and Fed Chair Jerome Powell met with major banks to discuss cyber risks from advanced AI models like “Mythos,” which can find and exploit system weaknesses.
The U.S. Dollar Index (DXY) remains directionless and heads for its biggest weekly loss since late January, supporting gold prices toward a second weekly gain. EURUSD and GBPUSD stay stable but near weekly gains, while USDJPY is set for a second weekly loss. AUDUSD and NZDUSD aim for strong weekly gains, while USDCAD may post its first weekly loss in five weeks. West Texas Intermediate (WTI) crude reduces weekly losses, while Bitcoin (BTC) and Ethereum (ETH) head for a second weekly gain, even as equities remain cautious with modest gains.
Major currency pairs lack clear direction early Friday, but EURUSD and GBPUSD are set for weekly gains, while USDJPY heads for a second straight weekly loss. This reflects broad weakness in the U.S. Dollar due to mixed data and easing geopolitical tensions, with limited reaction to domestic factors. USDJPY could have gained from hawkish Bank of Japan (BoJ) expectations, but this theme has been in focus for a long time.
Japan is boosting energy security by releasing an additional 20 days of oil reserves, adding to 50 days already released, and reducing dependence on the Strait of Hormuz. Corporate goods prices rose 2.6% year-on-year, showing rising input costs. Finance Minister Katayama warned of possible action against excessive moves in oil and foreign exchange (FX).
Bank of Japan (BoJ) Deputy Governor Ryozo Himino highlighted a cautious but flexible policy stance, warning that a prolonged Middle East conflict could create policy challenges, while downplaying stagflation risks in Japan for now.
Elsewhere, Germany’s industrial production and trade balance data showed mixed results on Thursday.
A softer U.S. Dollar, along with China’s inflation data and a lack of negative domestic factors, helps AUDUSD and NZDUSD move toward weekly gains, while pushing USDCAD toward its first weekly loss in five weeks ahead of Canada’s March employment report. Weak Crude Oil prices, a key Canadian export, fail to stop USDCAD sellers.
China’s inflation data remains mixed, with the Producer Price Index (PPI) rising 0.5% year-on-year to end deflation, while the Consumer Price Index (CPI) came at 1.0%, below expectations, showing weak demand but higher input costs due to rising energy prices.
New Zealand’s Performance of Manufacturing Index (PMI) eased to 53.2 in March from 54.8, still showing expansion but losing momentum due to global uncertainty.
Earlier, oil prices rose as Iran pushed for a Lebanon ceasefire, lifting West Texas Intermediate (WTI) crude slightly and weighing on risk assets, but still keeping crude oil on track for its first weekly loss in three weeks. Sentiment later improved after U.S. President Donald Trump urged Israel’s Benjamin Netanyahu to ease tensions, opening the door for talks with Lebanon. However, risks remain if the Strait of Hormuz stays restricted, helping WTI crude oil hold its recent rebound.
Markets remain steady overall. Asia-Pacific stocks rise on earlier optimism, while the U.S. Dollar edges slightly higher and major currency pairs stay stable. Oil trades in a tight range and gold remains flat, showing markets are waiting for a clearer direction.
On Thursday, U.S. stock markets closed higher, led by Amazon, which gained 5.5% on plans to sell artificial intelligence (AI) chips, competing with Nvidia. Meta also rose 2.7%. However, software stocks fell sharply, including ServiceNow, Intuit, Adobe, and Palo Alto Networks.
Cryptocurrencies gain support from a softer U.S. Dollar and growing confidence that the U.S.-Iran conflict may ease soon. As a result, Bitcoin (BTC) and Ethereum (ETH) are set for a second straight weekly gain, despite limited movement early Friday.
Gold price stays on the bulls’ radar for a second straight week as a softer U.S. Dollar combines with uncertainty over the U.S.-Iran war. In addition, mixed signals on central bank actions, recent positive data from China, and continued buying from central banks and major economies, according to the World Gold Council (WGC) monthly report, support the gradual rise in the precious metal. However, gold (bullion) still has not crossed the 50-day Exponential Moving Average (EMA) resistance, which is keeping buyers cautious after its first monthly loss in March in the last eight months.
German Inflation and Canadian employment data will come before key U.S. releases, including the Consumer Price Index (CPI), University of Michigan (UoM) Consumer Sentiment Index for April, and Factory Orders, keeping traders active on Friday. Markets will also closely watch risk-related news as global economic leaders assess the chances of peace in Iran, the Strait of Hormuz, and Lebanon ahead of Saturday’s U.S.-Iran talks in Islamabad, Pakistan.
Given that the U.S. Dollar (USD) is already under pressure due to mixed sentiment and recent mixed data, any further weakness in U.S. statistics and improving confidence in a potential Iran ceasefire deal could add downside pressure on the Greenback (USD). This may allow major currencies, cryptocurrencies, and commodities to edge higher, potentially ending the week on a positive note. However, if sentiment worsens and U.S. data strengthens, the USD could rebound, pushing these assets lower.
Meanwhile, Gold (XAUUSD) and Crude Oil (WTI) are both likely to post modest gains due to ongoing uncertainty linked to Iran, the Strait of Hormuz, and Lebanon. However, Bitcoin (BTC) and equities may face mild losses unless market confidence improves, which appears less likely for now.
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