Major currencies were broadly stable in early Thursday trade, with markets on hold ahead of renewed talks between the United States and Iran and a fresh batch of US economic data, including weekly jobless claims and March industrial production.
The US dollar traded narrowly, holding firm against the Japanese yen while slipping against commodity‑linked currencies such as the Australian and Canadian dollars. The Dollar Index hovered just below 98.00 after a flat close on Wednesday, and US equity futures edged 0.1% to 0.4% higher, pointing to a cautious positive open on Wall Street.
Diplomatic uncertainty keeps risk appetite in check
In Washington, President Trump said the conflict with Iran could be resolved “soon” and noted that the Strait of Hormuz was reopening to traffic. Media reports suggested the US was weighing a two‑week ceasefire extension, a claim the White House denied. Press Secretary Leavitt said negotiations were ongoing.
Iranian officials are due to meet Pakistan’s military chief in Tehran for further regional discussions, while a second round of direct US–Iran talks is under consideration.
The political backdrop remains dominated by the looming April 21 ceasefire deadline. Market participants see a binary setup: a breakthrough or extension could further suppress the geopolitical risk premium, favouring risk‑sensitive assets and weighing on traditional havens; a breakdown in talks could quickly reverse that dynamic, triggering a flight to quality.
Wall Street mixed as traders weigh growth and inflation
US stocks finished Wednesday unevenly. The Dow Jones Industrial Average slipped marginally, while the S&P 500 added 0.8%, reflecting selective risk‑taking rather than broad‑based conviction.
Later on Thursday, weekly initial jobless claims and March industrial production will offer a near‑term read on US economic momentum. Recent claims data have pointed to a resilient labour market, with continuing claims at their lowest since May 2024. Any surprise weakness could shift expectations around the Federal Reserve’s policy path.
Industrial production figures will follow March’s ISM manufacturing survey, which showed expansion with a PMI of 52.7 but also a sharp rise in the prices‑paid component to 78.3. That combination of solid activity and rising input costs complicates the outlook for rate cuts, as persistent inflation would limit the Fed’s room to ease, supporting the dollar and challenging some risk and alternative assets.
Dollar holds near 98.00 as traders watch policy and geopolitics
Weekly performance data show the US dollar strongest against the yen and softer against the Australian and Canadian dollars. The recent dip in the Dollar Index below 98.00 has been tied partly to hopes of de‑escalation in the Middle East.
Seasonal patterns also loom large: April has historically been a weak month for the greenback, with the Dollar Index closing lower in roughly two‑thirds of years since 2000. A durable diplomatic success with Iran could accelerate dollar softness, particularly against commodity currencies that typically benefit in a “risk‑on” environment.
According to 2022 figures, the US dollar was on one side of 88% of all global foreign exchange transactions, with average daily turnover of about $6.6 trillion. Fed policy decisions on interest rates and balance sheet programs such as quantitative easing or tightening remain the dominant drivers of the currency’s longer‑term trajectory.
Asia‑Pacific: Australian dollar lifts as China growth beats forecasts
Australian labour data for March showed the unemployment rate steady at 4.3%, in line with expectations, while employment rose by 17,900, slightly below the 20,000 consensus. The figures were solid enough to support the Australian dollar, which firmed toward 0.7200, its highest level since mid‑2022.
Sentiment toward the Australian currency was further bolstered by stronger Chinese data. China’s economy grew 5.0% year‑on‑year in the first quarter, above forecasts of 4.8% and faster than the 4.5% pace in the previous quarter, according to the National Bureau of Statistics. As China is Australia’s largest trading partner, the upside surprise reinforced the outlook for Australian exports and risk‑linked currencies more broadly.
Technically, the Australian dollar is testing a key resistance zone between 0.7109 and 0.7137. A sustained break higher, combined with constructive global risk sentiment, could open further upside if geopolitical tensions ease and the dollar softens.
Europe: UK data surprise to the upside as euro waits on ECB minutes
In the United Kingdom, February GDP rose 0.5% month‑on‑month, far exceeding the 0.1% consensus. Industrial production increased 0.5%, while manufacturing output dipped 0.1%. The pound traded just above 1.3550 after the release, showing only a muted reaction as traders weighed whether the stronger data meaningfully alters the Bank of England’s medium‑term policy outlook.
Some market analysts have projected that the pound could climb toward 1.40 by the end of 2026, a path that would likely be supported by broad dollar weakness and continued UK growth resilience, though much depends on the relative stance of the Fed and the Bank of England.
The euro was little changed around 1.1800, with market focus on the European Central Bank’s minutes from its March meeting. The minutes are expected to shed light on the timing and pace of any future rate adjustments as the ECB balances cooling inflation against still‑fragile growth.
Yen under pressure as US and Japan discuss currency stability
The dollar rebounded against the yen, rising toward 159.00 after dipping below 158.30 earlier in the session. The move reflects both underlying dollar strength and ongoing pressure on the yen amid wide interest rate differentials between Japan and the United States.
Japanese Finance Minister Katayama said she had spoken with US Treasury Secretary Bessent about foreign exchange stability and stressed the importance of continued communication on currency issues. The comments underscore heightened sensitivity in Tokyo to rapid moves in the yen, though there was no explicit signal of imminent intervention.
Gold retreats but remains supported by risk and inflation themes
Gold fell 1% on Wednesday, halting a two‑session rally, but continued to trade above $4,800 an ounce in early Thursday dealing. The pullback came alongside modest gains in equities and a steadier dollar, yet the metal remains underpinned by geopolitical risks and uncertainty over the Fed’s response to inflation dynamics.
Spot prices were quoted around $4,825, with traders watching both the US–Iran talks and upcoming US data for fresh direction. A breakdown in negotiations or a renewed inflation surprise would likely revive demand for the metal as a hedge against both geopolitical and macroeconomic risk.
Major financial institutions remain constructive on gold’s medium‑term outlook. Some, including JPMorgan, have floated year‑end targets as high as $6,300, contingent on a combination of persistent inflation, limited Fed easing and episodic geopolitical flare‑ups.
Outlook: binary risk for high‑beta assets and dollar‑sensitive trades
The current market calm masks significant event risk around the ceasefire deadline and the incoming US data. For holders of high‑beta assets and positions sensitive to dollar swings, the backdrop is increasingly binary:
- A durable diplomatic breakthrough and signs of contained inflation could weaken the dollar, support equities and commodity‑linked currencies, and temper demand for havens such as gold and the yen.
- A relapse into conflict or evidence of sticky inflation would likely bolster the dollar and traditional safe havens while pressuring risk assets.
With the Dollar Index parked near 98.00 and key technical levels in currencies such as the Australian dollar and pound under test, traders face a pivotal few sessions that could define the next leg in global foreign exchange and cross‑asset trends.
For deeper insight into how macro events shape crypto, explore our guide on crypto and DeFi in 2025 today.
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