Markets Tread Carefully as US-Iran Tensions Rattle Oil and FX
Oil swings and dollar weakness define a cautious European session as Trump claims Iran sought a deal amid ongoing strikes.
Global markets adopted a wary tone during Thursday's European session as traders weighed fresh US-Iran hostilities against renewed signals that diplomatic off-ramps may still exist. President Trump publicly claimed Iran had reached out seeking a deal — an assertion that echoed nearly word-for-word the diplomatic choreography that preceded a prior ceasefire attempt more than a month ago, suggesting the conflict has reset to square one rather than moved forward.
Oil was the session's most volatile asset, with WTI crude sliding as low as $72.40 before recovering sharply to $74.01, a gain of 0.7% on the day, as additional reports of US-Iran strikes kept supply anxieties elevated. The whipsaw move underscored how headline-sensitive energy markets have become, with traders repricing risk in real time as each new dispatch crossed the wire.
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Currency markets reflected a similar hesitancy. The US dollar initially weakened on Trump's deal comments but quickly pared losses. EUR/USD spiked to 1.1450 before retreating to 1.1425, up just 0.1%, while GBP/USD touched 1.3430 before sliding back to a flat 1.3385. The New Zealand dollar led major currencies, while the US dollar and Canadian dollar lagged. Meanwhile, the European Central Bank's Escriva cautioned that the ECB cannot recalibrate monetary policy in response to every geopolitical shift, even as ECB accounts showed all members viewed inflation risks as tilted to the upside.
Equities managed a fragile bid, with S&P 500 futures edging up 0.2% and Nasdaq futures climbing 0.7% as chipmakers sought to recover from recent weakness — Micron and Sandisk each gained nearly 5% in pre-market trading. Safe-haven and risk assets alike found modest support: gold rose 0.7% to $4,105, silver added 1.1% to $58.98, and Bitcoin climbed 1% to $62,704. Ten-year Treasury yields ticked up 2 basis points to 4.587% after an earlier dip toward 4.56%. Japan's chief cabinet secretary added another layer of caution by saying the government is monitoring markets with a high sense of urgency.
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