Forex News

• US equities sold off at the open but recover sharply from session lows as investors digest the US-Israel military strikes on Iran over the weekend.
• Oil prices surge over 8% on fears of supply disruption through the Strait of Hormuz, lifting energy stocks while hammering airlines and travel names.
• Defense stocks rally hard with Lockheed Martin, Northrop Grumman, and RTX all posting strong gains on expectations of prolonged military spending.
• ISM Manufacturing PMI comes in at 52.4 for February, marking the second straight month of expansion.

The Dow Jones Industrial Average is trading down around one-fifth of one percent at the time of writing. The S&P 500 is nearly flat, while the Nasdaq Composite has flipped green for the day. All three indexes have staged a significant recovery from their session lows: the Nasdaq was down as much as 1.6% earlier in the session, while the S&P 500 and Dow both pulled back around 1.2% at their worst.

Oil rips, Gold catches a bid, and the VIX spikes

The escalating US-Iran conflict is the dominant theme in markets today. Over the weekend, the US and Israel launched coordinated strikes on Iran in an operation dubbed "Epic Fury," which killed Iran's Supreme Leader Ayatollah Ali Khamenei. Iran retaliated with strikes against US bases in the Middle East, killing three US service members. West Texas Intermediate (WTI) Crude is trading around $72 per barrel, up roughly 8% from Friday's close near $67. Brent Crude has hit a new 52-week high above $78. The surge reflects fears of supply disruption through the Strait of Hormuz, where container shipping giants have already suspended operations and rerouted vessels around Africa. Gold is catching a strong safe-haven bid, trading near $5,400 per ounce — up over 2% on the day. The CBOE Volatility Index (VIX) has surged about 19% to around 23.6, its highest level of 2026 so far, pushing above its long-run average around 20.

Defense stocks soar, airlines and travel names get crushed

It's a tale of two sectors today. Defense names are flying, with Lockheed Martin (LMT) up over 3%, Northrop Grumman (NOC) gaining around 4%, and RTX (RTX) climbing a similar amount. Drone maker AeroVironment (AVAV) has jumped more than 10%. Investors are betting that the conflict translates directly into accelerated government defense spending. On the flip side, travel and airline stocks are getting hammered. United Airlines (UAL) is down over 5%, with American Airlines (AAL) and Delta Air Lines (DAL) falling a similar amount. Hotel chains Marriott International (MAR) and Hilton Worldwide (HLT) are both lower, while booking platforms Expedia (EXPE) and Booking Holdings (BKNG) are also seeing significant selling pressure as the conflict disrupts global tourism and cancels flights to Middle East destinations.

Energy producers rally on surging Oil prices

The Oil price spike is translating directly into gains for energy producers. Exxon Mobil (XOM) is up around 4%, Chevron (CVX) is gaining roughly 3%, and ConocoPhillips (COP) is advancing over 5%. Tanker stocks are also surging on expectations of longer shipping routes — Frontline (FRO) is up more than 5%, DHT Holdings (DHT) is gaining 7%, and International Seaways (INSW) is up 6%. The big question for markets from here is whether the surge in Oil prices translates into a fresh round of inflation concerns that complicates the Federal Reserve's (Fed) rate path. Rates markets are currently pricing in a roughly 96% probability that the Fed holds rates steady at 3.50-3.75% at its March meeting, and the spike in energy prices gives policymakers even less reason to cut anytime soon.

Nvidia bets big on photonics with $4 billion investment

In corporate news outside the geopolitical chaos, Nvidia (NVDA) announced it is investing $2 billion each in Lumentum Holdings (LITE) and Coherent (COHR) as part of multi-year strategic partnerships focused on advanced photonics technology for next-generation AI data centers. Both Lumentum and Coherent surged over 7% in premarket trading on the news, though gains have moderated through the session. Nvidia itself is trading lower on the day as part of the broader risk-off move, despite the investment being viewed positively for its AI infrastructure ambitions. Light-based photonics technology is increasingly seen as critical for scaling AI networks and reducing energy bottlenecks in data centers.

ISM Manufacturing PMI holds in expansion territory

On the data front, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) came in at 52.4 for February, slightly below January's 52.6 but still comfortably in expansion territory. It marks the second straight month of expansion for the manufacturing sector — only the third time in 40 months. New Orders came in at a healthy 55.8, down from 57.1 in January but still showing solid demand. The Prices Index and Supplier Deliveries sub-indexes are worth watching in the weeks ahead, particularly if the Oil price surge persists — higher input costs and potential shipping disruptions could start feeding through to the manufacturing sector and complicate the inflation picture heading into the second quarter.

Dow Jones daily chart

MUFG’s Senior Currency Analyst Michael Wan argues that sustained Oil price spikes linked to the Iran conflict would pressure most Asian currencies, as regional economies are largely net Oil importers. He highlights KRW, INR and PHP as more vulnerable, while CNH and MYR appear relatively resilient. Wan also notes potential delays to rate cuts and steeper FX forward curves across Asia.

Oil spike fallout for Asian currencies

"For Asia FX, a prolonged and escalating conflict with sustained oil price spikes will weigh on Asian currencies given that most in our region are net oil importers."

"If meaningful oil price increases are sustained, we think the likes of KRW, INR, and to some extent PHP are more vulnerable given their linkages to oil imports and also KRW’s higher beta nature. Meanwhile, CNH and MYR should be relatively more resilient in an Asian context."

"From an inflation perspective, our analysis shows that CPI inflation could rise by around 0.1-0.9pp across Asia, with Thailand, Vietnam, the Philippines, and South Korea the most sensitive to oil price increases."

"Overall, we don’t think Asian central banks will hike rates just because of this risk, but it could delay rate cuts for the likes of the Philippines and Indonesia, and further reduce the probabilities of cuts for markets such as India and South Korea."

"We will likely see some steepening in FX forward curves especially in these markets in Asia reflecting also higher risk premia. From a global perspective, we would expect relative havens such as JPY to outperform in the near-term, while higher beta FX such as AUD to underperform."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver price falls toward $87.90 on Monday, down 6.33%, reversing earlier gains.
• The US Dollar rises, supported by a stronger-than-expected ISM Manufacturing PMI.
• US Dollar strength and renewed inflation expectations weigh on precious metals despite ongoing geopolitical tensions.

Silver (XAG/USD) drops toward $87.90 at the time of writing on Monday, losing 6.33% on the day and sharply reversing the gains recorded earlier in the day. After initially benefiting from strong safe-haven demand amid war in the Middle East, the white metal now faces significant selling pressure, mainly driven by the renewed strength of the US Dollar (USD).

The Greenback remains firmly bid against the backdrop of the war in the Middle East, as investors favor the US Dollar as a highly liquid safe-haven currency. The US Dollar Index (DXY) gains 1.08%, trading around 98.70, increasing pressure on Dollar-denominated commodities, including Silver.

The bullish momentum in the Greenback is reinforced by a stronger-than-expected ISM Manufacturing Purchasing Managers Index (PMI). ISM reported that Manufacturing PMI edged down slightly to 52.4 in February from 52.6 in January, but it beat the market consensus of 51.8 and remained well above the 50 threshold, signaling continued expansion in the sector.

The report’s components further support the US Dollar. The Prices Paid Index jumped sharply to 70.5 from 59, pointing to renewed cost pressures in the production pipeline. Meanwhile, the Employment Index improved to 48.8 but remains in contraction territory. The strong rise in input prices reinforces expectations that the Federal Reserve (Fed) will adopt a cautious stance before considering any near-term rate cuts.

The ISM release, therefore, acts as a catalyst, reinforcing an already bullish trend in the US Dollar. The rebound in real yields and the market’s repositioning toward a more restrictive monetary policy scenario also mechanically weigh on non-yielding assets such as Silver.

Despite persistent geopolitical tensions in the Middle East, which continue to fuel some degree of risk aversion, the current market dynamic is dominated by US Dollar strength.

Silver Technical Analysis

In the 4-hour chart, XAG/USD trades at $87.95. The near-term bias turns mildly bearish after bulls failed to sustain the spike above $96.00 and price slid back below the $92.00 support level, underscoring a loss of upside momentum. Spot now trades above the 50-period Simple Moving Average (SMA) around $86.90, acting as the first support area, before the 100-period SMA near $82.90, reflecting a transition from a strong uptrend to a consolidation phase rather than a full trend reversal. The Relative Strength Index (RSI) has retreated toward 44 from overbought territory above 70, signaling easing buying pressure and supporting the corrective tone.

Initial resistance emerges at the recent rebound high around $94.50 and the peak just above $96.00. A recovery through these levels would reopen the path toward the prior impulse top and weaken the current pullback narrative. On the downside, a break below $86.90 would expose the next support band toward $82.90, before $81.50, where lies a rising trend structure, and a failure there would strengthen the bearish bias for the 4-hour outlook.

(The technical analysis of this story was written with the help of an AI tool.)

• Gold trims gains after surging to a one-month high as US-Israel attacks on Iran fuel safe-haven demand.
• US NFP and key economic data in focus this week for fresh Fed monetary policy clues.
• Technically, XAU/USD sustains bullish momentum with price holding above key SMAs.

Gold (XAU/USD) eases after opening the week with a bullish gap amid escalating geopolitical tensions in the Middle East, with the US-Iran war triggering a fresh wave of safe-haven demand.

At the time of writing, XAU/USD trades around $5,300, trimming earlier gains after climbing above the $5,400 mark earlier in the day.

US-Israel strikes on Iran trigger risk-off sentiment

Over the weekend, the United States and Israel carried out joint strikes on Iran. The strikes resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

Iran responded by launching attacks on US air bases in the region, fueling broad risk aversion in global markets and boosting demand for traditional safe-haven assets such as Gold and the US Dollar (USD).

The military action followed several rounds of high-level nuclear talks between Washington and Tehran last week. In a brief telephone interview with The New York Times on Sunday, US President Donald Trump said the military campaign could last “four weeks or less,” raising fears of a possible invasion and even regime change in Iran.

The conflict is also raising economic concerns, increasing fears of supply disruptions in the Strait of Hormuz. The key shipping route handles nearly 20% of global Oil shipments. Higher energy prices could add to inflation pressures and support Gold’s appeal as a store of value.

West Texas Intermediate (WTI) Crude Oil has climbed above $70 per barrel, its highest level since June 2025, and is trading about 5.50% up at the time of writing.

Elsewhere, uncertainty over US trade policy and sustained expectations of Federal Reserve (Fed) rate cuts later this year add another layer of support for Gold.

US NFP in focus this week as markets reassess Fed rate cut outlook

Beyond the war headlines, investor attention will also turn to the US labor market data this week, including the ADP Employment Change and the Nonfarm Payrolls (NFP) report, which could shape expectations for the Fed’s monetary policy path. Recent economic data showed inflation remains sticky, prompting traders to scale back bets on near-term monetary policy easing.

Data released earlier in the day showed that the ISM Manufacturing Purchasing Managers' Index (PMI) eased slightly to 52.4 from 52.6 in January. The ISM Manufacturing Employment Index rose to 48.8 from 48.1, while the New Orders Index fell to 55.8 from 57.1. Meanwhile, the ISM Manufacturing Prices Paid Index jumped sharply to 70.5 from 59.0.

Technical analysis: RSI, MACD signal strengthening upside momentum

On the daily chart, XAU/USD maintains a bullish bias in the near-term, with the price holding above both the 21-day and 50-day Simple Moving Averages (SMAs), which continue to slope higher and reflect sustained buying interest.

The Relative Strength Index (RSI) at 65 signals firm positive momentum without entering extreme overbought territory, while the Moving Average Convergence Divergence (MACD) line turns higher in positive territory, suggesting strengthening upside pressure after a recent consolidation phase.

The Average Directional Index (ADX) has stabilized near 20, indicating a maturing but still trending environment rather than an aggressive breakout phase.

On the upside, initial resistance stands near the recent high zone around $5,400-$5,500. A sustained break above this area could open the door toward the $5,598 all-time high as the next bullish objective.

On the downside, immediate support emerges near the rising 21-day SMA around $5,040. A failure to hold above this level could signal fading momentum and expose the $4,900 support area, followed by the 50-day SMA near $4,815.

(The technical analysis of this story was written with the help of an AI tool.)

• EUR/USD drops over 1% as investors flock to the safe-haven US Dollar amid Middle East tensions.
• Oil supply risks through the Strait of Hormuz raise inflation concerns for central banks.
• US ISM Manufacturing PMI eases to 52.4 in February, while Eurozone HCOB Manufacturing PMI holds steady at 50.8.

The Euro (EUR) edges lower against the US Dollar (USD) on Monday, with EUR/USD sliding more than 1% as investors rotate into the safe-haven Greenback amid escalating geopolitical tensions in the Middle East. At the time of writing, the pair trades around 1.1683, marking its lowest level in over a month.

A joint US-Israel strike on Iran over the weekend dampened risk appetite and boosted demand for the US Dollar. Iran retaliated by launching missile and drone attacks targeting US military bases across several Gulf nations, seeking revenge after the strikes resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

US President Donald Trump said on Monday that “a big wave has yet to come” in the war with Iran, CNN reported. Meanwhile, US Secretary of Defense Pete Hegseth said that the US is “not ruling out any options,” adding that “we fight to win.”

Any prolonged conflict could disrupt Oil supply through the Strait of Hormuz, pushing energy prices higher and adding to global inflation pressure, which could complicate the monetary policy outlook for major central banks.

Austria’s central bank governor and European Central Bank (ECB) policymaker Martin Kocher said the ECB should be ready to move interest rates “in either direction” if uncertainty intensifies. Separately, ECB’s Pierre Wunsch said the central bank may reconsider its policy stance if oil prices stay elevated.

Meanwhile, the Federal Reserve (Fed) was already in a wait-and-see mode before considering any monetary policy easing, as inflation in the United States remains sticky and continues to run above the 2% target. As a result, traders have scaled back expectations for near-term rate cuts, providing an additional tailwind for the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.64, its highest level since January 22.

On the data front, the US ISM Manufacturing Purchasing Managers' Index (PMI) eased slightly to 52.4 in February from 52.6 in January. The Manufacturing Employment Index rose to 48.8 from 48.1, while the New Orders Index declined to 55.8 from 57.1. The Manufacturing Prices Paid Index jumped sharply to 70.5 from 59.0.

In the Eurozone, the HCOB Manufacturing PMI stood at 50.8 in February, unchanged from January and in line with expectations.

• USD/CHF trades around 0.7800, up 1.50% on the day at the time of writing.
• The US Dollar remains firmly bid amid the war in the Middle East.
• ISM Manufacturing PMI comes in above expectations, reinforcing the USD upward momentum.

USD/CHF trades around 0.7800 on Monday at the time of writing, up 1.50% on the day, as the US Dollar (USD) extends gains that were already in place before the release of US manufacturing data.

The Greenback had been strengthening since the start of the day, supported primarily by the war in the Middle East. Escalation in the region boosts demand for safe-haven assets, and the US Dollar benefits from its global reserve currency status and deep liquidity. This defensive positioning pushed the US Dollar Index (DXY) toward 98.70 at the time of press, gaining 1.10% for the day.

The Institute for Supply Management (ISM) reported that its Manufacturing Purchasing Managers Index (PMI) eased slightly to 52.4 in February from 52.6 in January. Although the headline figure edged lower, it beats the market consensus of 51.8 and remains comfortably above the 50 threshold, signaling ongoing expansion in the manufacturing sector.

Details of the report further support the US Dollar. The Prices Paid Index jumped sharply to 70.5 from 59, pointing to renewed cost pressures in the production pipeline. Meanwhile, the Employment Index improved to 48.8 but remains in contraction territory. The strong rise in input prices reinforces expectations that the Federal Reserve (Fed) will remain cautious in considering any near-term rate cuts.

The release of the ISM data therefore acts as a catalyst that reinforces an already bullish trend in the US Dollar. Rather than triggering a reversal, the figures validate the existing upward move, encouraging additional buying interest in the Greenback.

In Switzerland, Real Retail Sales declined by 1.1% YoY in January after a revised 2.8% surge in December, missing expectations of a 2.7% increase, while the SVME Purchasing Managers Index fell to 47.4 in February from 48.8 in January, also below forecasts for a rise to 50.

In this environment, USD/CHF continues to advance as the stronger US Dollar outweighs the traditional safe-haven appeal of the Swiss Franc (CHF). The pair’s rise reflects both geopolitical-driven flows into the US Dollar and macroeconomic data that underpin the currency’s resilience at the start of the week.

HSBC Asset Management argues several emerging markets are entering a structurally bullish phase, highlighting South Africa’s improving fiscal stance and policy credibility. The budget projects rising primary surpluses and a peak in the debt-to-GDP ratio, while higher commodities and high real yields support confidence. With the MSCI South Africa up sharply in USD terms, reforms and external tailwinds are seen enhancing EM’s long-term appeal.

Reforms, yields and commodities bolster appeal

"Several emerging market economies are moving into what looks like a sustained, structurally bullish phase – and South Africa is a case in point."

"Last week’s budget reaffirmed a commitment to balancing the books, with primary surpluses projected to rise in the coming years and the debt-to-GDP ratio set to peak for the first time in 17 years before declining. Stronger-than-expected revenues mean tax hikes are off the table, and long-term bond issuance is also being cut."

"Even the IMF has noted the country’s improving policy credibility, progress on reforms, and macro stability."

"For South Africa, there have been other tailwinds. Higher commodity prices have boosted terms of trade, while high real yields and central bank commitments to a lower inflation target, have anchored confidence."

"Meanwhile, like other emerging markets, South Africa’s stock market has been on a strong run over the past 12 months – with the MSCI SA up 80% in USD terms. In that context, the country’s trajectory highlights how reform, credible policy, and external tailwinds are combining to turn emerging markets into an increasingly appealing structural story for investors."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• USD/CAD rises as the US-Iran war fuels safe-haven demand for the US Dollar.
• Oil prices surge more than 5% amid concerns over potential supply disruptions through the Strait of Hormuz.
• Markets now focus on key US labor data this week, including the ADP employment and NFP report.

The Canadian Dollar (CAD) trades on the back foot against the US Dollar (USD) on Monday as the US-Iran war sparks a risk-off mood in global markets, boosting demand for the safe-haven Greenback and weighing on risk-sensitive currencies.

At the time of writing, USD/CAD is trading around 1.3680, up about 0.30%.

The risk-off move follows joint US-Israel strikes on Iran over the weekend that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei. In retaliation, Iran launched missile and drone attacks targeting US military bases across several Gulf nations, fueling a wider regional conflict.

Still, the Canadian Dollar lacks strong follow-through selling as escalating tensions in the Middle East raise the risk of supply disruptions through the Strait of Hormuz, embedding a geopolitical risk premium in Oil prices and lending support to the commodity-linked Loonie.

Although Iran has not formally declared a blockade, the Islamic Revolutionary Guard Corps (IRGC) has reportedly warned ships via VHF radio that “no ship is allowed to pass” through the Strait of Hormuz.

Canada’s status as a major crude exporter makes its currency particularly sensitive to movements in Oil prices. West Texas Intermediate (WTI) climbed near $73 at the weekly open before easing during the European session. At the time of writing, WTI trades around $70.89, still up more than 5% on the day and hovering near its highest level since June 2025.

On the data front, Canada’s S&P Global Manufacturing Purchasing Managers' Index (PMI) rose to 51 in February, up from 50.4 in January.

In the United States, manufacturing activity remained in expansion territory in February. The ISM Manufacturing PMI eased slightly to 52.4 from 52.6 in January.

The ISM Manufacturing Employment Index rose to 48.8 from 48.1, while the New Orders Index fell to 55.8 from 57.1. Meanwhile, the ISM Manufacturing Prices Paid Index jumped sharply to 70.5 from 59.0.

Attention now turns to US labor market data due later this week, including the ADP Employment Change on Wednesday, weekly Initial Jobless Claims on Thursday, and the Nonfarm Payrolls (NFP) report on Friday.

• US ISM Manufacturing PMI declined slightly in February.
• The US Dollar Index clings to strong daily gains near 98.50.

The business activity in the US manufacturing sector expanded in February, albeit at a slower pace than in January, with the Institue for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) edging lower to 52.4 from 52.6 in January. This print came in better than the market expectation of 51.8.

Other details of the report showed that the Employment Index improved to 48.8 in February but remained in the contraction territory. Additionally, the Prices Paid Index, the inflation component of the survey, jumped to 70.5 from 59 in January.

Assessing the survey's findings, "in February, US manufacturing activity remained in expansion territory, although growing at a slower pace than the month before," said Susan Spence, MBA, Chair of the Manufacturing Business Survey Committee.

"Of the five subindexes that make up the PMI, two (New Orders and Production) indicated slower growth compared to the previous month, and the Employment and Inventories indexes remained in contraction," Spence added.

Market reaction

The US Dollar (USD) preserves its strength following the PMI data. At the time of press, the USD Index was up 0..85% on the day at 98.46.

OCBC strategists Sim Moh Siong and Christopher Wong note that UK political risks, including Labour’s by‑election defeat and potential leadership challenge, continue to weigh on Pound sentiment. However, firmer growth data, ongoing disinflation, a loosening labour market and supportive gilt issuance dynamics provide fiscal relief. Once political uncertainty eases, strategists see scope for EUR/GBP to move lower over time.

UK politics versus improving macro backdrop

"Political risks remain a drag on the GBP. Labour’s defeat in last week’s Gorton by-election increases the likelihood of a leadership challenge after the May local elections."

"Still, it is unclear whether lingering political uncertainty warrants a higher fiscal risk premium – the key factor behind past episodes of GBP weakness."

"Recent data point to a firmer UK growth backdrop than the rise in the unemployment rate suggests. Ongoing disinflation and a loosening labour market support further BoE cuts, which in turn provide fiscal relief."

"This week’s gilt remit should add to the positive fiscal narrative following January’s large budget surplus. GBP volatility may stay elevated near term."

"However, once political risks ease, we continue to see scope for EURGBP to retrace lower."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)