Forex News

• The Dow dropped over 800 points on Thursday as an Iranian missile strike on an Oil tanker reignited fears of prolonged supply disruption through the Strait of Hormuz.
• West Texas Intermediate crude surged 6% to above $79 per barrel, its highest level since June 2025, while Brent crude topped $84.
• Broadcom rallied after posting a strong earnings beat, with AI chip revenue more than doubling year-over-year and a bullish $22 billion revenue guide for next quarter.
• Weekly jobless claims came in flat at 213K, slightly below expectations, keeping the labor market picture steady ahead of Friday's February employment report.

The Dow Jones Industrial Average was down 840 points, or 1.73%, to 47,885 at the time of writing, giving back all of Wednesday's gains and then some. The S&P 500 fell 0.82% to around 6,810, while the Nasdaq Composite dipped 0.50% to the 22,690 region. The Russell 2000 dropped 1.65% to land near 2,590, with small caps bearing the brunt of the risk-off shift. Thursday's selling was broad, but the Dow's underperformance was notable, dragged lower by defensive and consumer staple names including Merck (MRK), Johnson & Johnson (JNJ), and Walmart (WMT), all falling more than 2%.

Iran conflict sends Oil to nine-month highs

The catalyst for Thursday's selloff was a fresh escalation in the Middle East. Iran claimed it struck an Oil tanker with a missile, according to state media reports, while the British Navy confirmed a large explosion at a tanker at anchor in Iraqi territorial waters. West Texas Intermediate (WTI) crude futures surged 6% to trade above $79 per barrel — its highest since June 2025 — while Brent crude jumped 3% to over $84. Tanker traffic through the Strait of Hormuz has effectively ground to a halt since the US-Israeli war against Iran began last weekend, with Iran's Revolutionary Guard having ordered the strait's closure and threatened to attack any vessel that passes through. Around 20% of global Oil consumption is exported through the waterway. President Trump said earlier in the week that the US would provide political risk insurance for tankers and, if necessary, US Navy escorts, but the missile strike on Thursday undercut that reassurance.

Rate cut bets narrow as Oil-driven inflation fears build

The sharp move higher in crude is starting to filter into rate expectations. Traders are now positioning for just a single Federal Reserve (Fed) rate cut this year, down from expectations of multiple cuts as recently as last week. According to the CME FedWatch tool, there is roughly a 96% probability that the Fed holds rates steady at 3.50-3.75% at its March 18 meeting. The repricing reflects growing concern that a prolonged conflict could push energy costs sustainably higher, reigniting inflationary pressures just as the Personal Consumption Expenditures Price Index (PCE) data from late February already rattled markets with a hotter-than-expected print. Treasury yields moved higher on Thursday, adding to the pressure on equity valuations. The combination of sticky inflation and geopolitical risk premium has created a difficult backdrop for the Fed, which had been widely expected to resume cutting later this year.

Broadcom bucks the selloff with blockbuster AI earnings

Broadcom (AVGO) was a rare bright spot, rallying around 6% after reporting first-quarter results that beat on both the top and bottom line. The chipmaker posted earnings per share of $2.05 versus $2.03 expected and revenue of $19.31 billion versus $19.18 billion estimated, a 29% increase year-over-year. The standout was AI revenue of $8.4 billion, up 106% year-over-year, driven by surging demand for custom AI accelerators and networking chips. CEO Hock Tan told analysts the company has a line of sight to AI chip revenue exceeding $100 billion in 2027. Broadcom guided second-quarter revenue to approximately $22 billion, implying 47% year-over-year growth, and announced a new $10 billion share repurchase program. Salesforce (CRM) also outperformed, gaining nearly 5%, while Microsoft (MSFT) and IBM (IBM) eked out modest gains in an otherwise ugly session for the Dow.

Gold and safe havens hold firm above $5K

Gold continued to attract safe-haven flows on Thursday, trading around $5,175 per ounce — up roughly 1% on the day — as the widening Middle East conflict kept demand elevated. The precious metal has climbed about 20% year-to-date, supported by central bank buying, geopolitical uncertainty, and a softer US Dollar. Silver was also firmer, rising over 1% to around $84.50. Separately, Berkshire Hathaway (BRK.B) disclosed that it has resumed share buybacks for the first time since 2024, with new CEO Greg Abel purchasing $15 million worth of stock personally. Abel told CNBC he consulted with Warren Buffett on the timing and valuation. Bitcoin also continued to attract interest as an alternative haven, trading above $71K after gaining roughly 5% on Wednesday.

Labor market steady ahead of Friday's payrolls report

Thursday's weekly initial Jobless Claims data showed filings unchanged at 213K for the week ending February 28, slightly below the consensus estimate of 215K. Continuing claims rose by 46K to 1.868 million, modestly above the 1.850 million expected. The data points to a labor market that remains stable, with low firing activity offsetting a gradual slowdown in hiring. Initial claims filed by federal employees — closely watched for signs of disruption from government shutdowns — fell by 25 to 529. The focus now shifts to Friday's February Nonfarm Payrolls (NFP) report, where economists expect payroll growth of around 60K and an unchanged unemployment rate of 4.3%. A weak print could reignite rate cut speculation, while a hot number would further cement the single-cut-in-2026 narrative that took hold this week.

Dow Jones daily chart

Scotiabank strategists Shaun Osborne and Eric Theoret note that for the US, focus is on incoming data and the Federal Reserve outlook as markets approach the March 18 FOMC meeting. They highlight that policymakers’ appearances are limited before the communications blackout, while short-term rates markets have materially reduced expectations for easing this year. Recent ISM and labor data point to resilient US economic activity.

Markets trim Fed easing expectations

"For the US, the focus remains centered on data and the outlook for the Fed. The recent softening in both initial and continuing claims has eroded one of the Fed’s key arguments for easing, in that the data suggest a resilient labor market."

"Market participants are flying relatively blind heading into the March 18 FOMC, with few policymakers scheduled ahead of the communications blackout period that begins on Saturday."

"Short-term rates markets are pricing about 40bps of easing this year, but no policy changes for either the March or April meetings and barely 10bps of easing by June."

"A 25bps cut is not fully priced until September, reflecting a material softening of expectations for easing as a result of both stronger data and the US/Iran conflict."

"The latest ISMs have been impressive, with both manufacturing and services showing a material improvement in sentiment and suggest a material re-acceleration in US economic activity."

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

Nordea’s Chief Analyst Jan von Gerich expects the ECB to stay on hold for now while closely monitoring how the Middle East conflict affects Euro-area growth and inflation. He argues that higher and prolonged energy prices, tight labour markets and sticky services inflation raise upside risks to ECB rates. Nordea still forecasts the first rate hike in the second half of next year, but sees rising risk of an earlier move.

ECB vigilance as energy risks build

"The ECB will remain on hold for now, but it will carefully assess, what consequences the conflict in the Middle East will have on the euro-area growth and inflation outlook. Amidst all the uncertainty, upside risks to ECB rates have increased."

"We tend to think that a prolonged episode of clearly higher energy prices would lead to tighter rather than easier monetary policy, given that central bankers vividly remember the inflation shock from 2022, when the ECB was somewhat late to tighten."

"We also keep our baseline ECB forecast unchanged for now, still seeing the first interest rate hike in the second half of next year, though we note that the risk of an earlier hike has risen."

"In addition, fresh data suggest the labour market remains rather tight, with unemployment falling to another record low in January, while services inflation remains sticky."

"Given the recent events, the monetary policy account from the ECB’s February meeting is largely old news, but for what it is worth, it also presented a long list of various risks, one of them being the concern towards higher energy prices."

"It was interesting that the account mentioned research suggesting that geopolitical risk shocks acted like adverse supply shocks, with a persistent, positive effect on inflation that led to an upward shift in the entire distribution, though not everybody in the Governing Council was convinced. For now, the ECB can afford to monitor, how the situation evolves."

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

• AUD/USD weakens on Thursday despite stronger-than-expected Australian growth data.
• Australia’s trade surplus narrows sharply in January, missing market expectations.
• The US Dollar remains supported by resilient economic indicators and the Middle East war.

AUD/USD trades around 0.7010 on Thursday at the time of writing, down 0.95% on the day, as the US Dollar (USD) continues to draw support from relatively strong US macroeconomic data and cautious market sentiment.

On the Australian side, the latest data delivered mixed signals. The Australian Bureau of Statistics reported that the trade surplus narrowed to A$2,631M in January, down from A$3,373M in December and well below the market consensus of A$3,900M. Exports declined by 0.9% MoM after a revised 0.9% increase previously, while imports rose by 0.8% following a revised 1.8% drop in the prior month.

These figures contrast with stronger economic growth data released earlier this week. Australia’s Gross Domestic Product (GDP) rose by 0.8% QoQ in the fourth quarter, beating expectations of 0.6%, while annual growth reached 2.6%, its highest level in three years. The expansion was largely driven by government spending and a rebound in inventories. This stronger growth backdrop reinforces expectations that the Reserve Bank of Australia (RBA) may maintain a tightening bias after raising its policy rate to 3.85% in February.

However, the pair remains under pressure as the US Dollar continues to benefit from solid economic momentum. Recent labor market data showed that Initial Jobless Claims in the United States (US) held steady at 213K for the week ending February 28, slightly below expectations of 215K, while Continuing Jobless Claims increased to 1.868M.

The Challenger, Gray & Christmas report also pointed to easing layoff activity in February. US-based employers announced 48.307K job cuts during the month, marking a sharp decline from 108.435K layoffs in January and significantly below the 172.017K cuts reported a year earlier. Despite the drop in announced layoffs, hiring plans have weakened considerably, falling 56% since the start of the year, suggesting that companies remain cautious about expanding their workforce even as large-scale job reductions moderate.

Additional indicators also point to underlying strength in the US economy. The ADP Employment Change report showed that the private sector added 63K jobs in February, beating the forecast of 50K and rising sharply from the previous revised reading of 11K. Meanwhile, the Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) climbed to 56.1, significantly above expectations for a decline to 53.5.

As a result, market expectations for aggressive monetary easing from the Federal Reserve (Fed) have been scaled back. According to the CME FedWatch tool, the chance that the Fed will keep interest rates unchanged at its July meeting has increased to 50.4%, while the first rate cut is now expected in September.

Geopolitical developments are also shaping market sentiment. Escalating tensions in the Middle East, following US and Israeli strikes on Iran and the effective closure of the Strait of Hormuz, have supported demand for safe-haven assets such as the US Dollar. Although hopes briefly emerged that diplomatic channels could reopen after reports of potential talks between Iran and the United States, Tehran later denied the claims, leaving the outlook for the conflict uncertain.

Looking ahead, investors now turn their attention to Friday’s key US releases, including the Nonfarm Payrolls (NFP) report and January Retail Sales, which could provide further clues about the strength of the US labor market and the likely path of Fed policy.

• GBP/USD falls 0.25% to 1.3337 as DXY hovers near 99.00.
• US Jobless Claims steady at 213K; layoffs drop sharply to 48.3K.
• Markets await Friday’s NFP, expected to show 59K job gains and 4.3% unemployment.

The Pound Sterling (GBP) resumes its downtrend for the week on Thursday, courtesy of heightened tensions in the Middle East and solid US employment data ahead of Friday's Nonfarm Payrolls report. At the time of writing, GBP/USD trades at 1.3337, down 0.25%.

Risk aversion from Middle East tensions and firm labor data keep Sterling under pressure

Risk appetite remains deteriorated as hostilities between the US, Israel and Iran entered their sixth day. Wall Street opened lower on Thursday, while the Greenback rallies for the third day of the week, according to the US Dollar Index (DXY).

The DXY, which measures the buck’s value against six currencies, is up 0.25%, stuck at 99.00.

Economic data in the US revealed that the labor market remains solid. Initial Jobless Claims for the week ending February 28 were unchanged at 213K, from upward revised figures of the last week, revealed the Labor Department. Estimates were seen at 215K, and fears of further deterioration are fading, as revealed by Fed officials in the Beige Book.

Policymakers revealed that the labor market is “generally stable in recent weeks as seven of the twelve districts reported no change in hiring.”

Other reports showed that companies fired 48.3K people in February, down 55% from January, as revealed by Challenger, Gray & Christmas.

In the meantime, Richmond Federal Reserve (Fed) President Thomas Barkin was slightly hawkish, saying that recent inflation data raises doubts about whether the Fed has finished its inflation fight.

In the UK, the economic docket remains absent, yet pressures are mounting over Prime Minister Keir Starmer, following local elections in Manchester, in which his Labour Party lost.

Aside from this, traders' focus is on the US NFP report, with analysts estimating the creation of 59K jobs, and the Unemployment Rate to remain steady at 4.3%.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3331. The near-term bias is mildly bearish as spot hovers below the cluster of simple moving averages, which are rolling over near 1.3500 and now track above price as dynamic resistance. The failed attempt to hold above the prior ascending support line, broken near 1.3597, reinforces the loss of upside momentum and aligns with the prevailing downward pressure suggested by the latest sequence of lower closes. The descending resistance trend line from 1.3869 continues to cap bounces and frames the broader corrective phase.

Initial resistance is seen around 1.3400, where the broken support line and nearby moving averages converge, with the descending trend line strengthening a wider cap closer to 1.3500. A daily close above 1.3500 would be needed to weaken the bearish setup and open the way toward 1.3600. On the downside, immediate support sits at the recent low near 1.3300, followed by 1.3250 and then 1.3200, where earlier reactions congregated. A break below 1.3300 would likely extend the decline toward the mid-1.31 area, in line with the current downtrend structure.

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

TD Securities analysts see the Bank of Canada balancing trade uncertainty, higher Oil prices and domestic demand. They say GDP must run above potential to avoid disinflationary risks and rate cuts, and that Q1 data will be pivotal. Energy-driven growth and inflation could help keep policy on hold, but consumer and fiscal trends remain more important.

Growth and Oil shape BoC outlook

"For the BoC to remain on hold this year, GDP growth needs to be above potential. Growth that is merely at potential implies persistent negative supply, creating disinflationary risks down the line – which would call for cuts."

"In that sense, Q1 data is hugely important. We don't necessarily need to see growth in line with the BoC's forecast of 1.8% in the January MPR, but anything materially below 1.0% would raise questions about the current policy setting. We have plenty of time for Governor Macklem's argument that monetary policy shouldn't necessarily respond to structural weakness in the economy, but it is still appropriate for the Bank to respond to cyclical shocks in this environment."

"The January 2026 MPR assumed $55/bbl WTI, so if oil prices hold near current levels ($75/$80 for WTI/Brent) it would conceivably add 0.4-0.5 p.p. to the BoC's baseline growth trajectory. It would also lift the Bank's inflation profile by a similar magnitude, leaving headline CPI sitting near 2.5% by Q4."

"This sort of incremental boost to growth would be enough to comfortably keep the Bank on the sidelines in a tight decision, but we'd emphasize that the energy price story is still probably less important than the outlook for government spending or the health of the consumer. We would also expect the Bank of Canada to look through any headline inflation shock if higher energy prices do not spill over into core measures."

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

ING’s Chris Turner notes that persistent geopolitical risks in the Middle East and elevated energy prices are supporting the Dollar. Turner expects DXY to drift towards the upper end of recent ranges, and highlights the concerns over US private credit.

Geopolitics, energy and credit risks

"Given much uncertainty, we suspect the dollar can edge towards the top of recent ranges today. The market will remain transfixed by European natural gas prices and assuming that these push higher again today, DXY can probably edge back towards the 99.40/50 area."

"Turning back to the US, last night's release of the Fed's Beige Book ahead of the 18 March FOMC meeting gave a picture. Growth seems mixed/subdued, as did the labour market. There was some suggestion that companies could be ready to pass on tariff costs to the consumer, but doubts about whether consumers, especially lower-income consumers, could handle it."

"In addition, we are starting to see more frequent headlines about the US private credit space and, in particular, the redemptions coming from business development company (BDCs). These are investment companies targeted at wealthy retail investors looking for alternative investment strategies. Funds raised are traditionally invested in SMEs."

"Some high-profile BDCs, such as those of Blue Owl and Blackstone, are currently seeing heavy redemptions as investors fear that their funds have been used to fund the AI boom for some of the software companies. Market focus is now on the size of any further redemptions, where BDCs get 'gated' or redemptions halted, and whether the BDCs need to sell illiquid investments to meet redemptions."

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

Scotiabank analysts Shaun Osborne and Eric Theoret highlight that the Canadian Dollar is uniquely resilient, remaining the only major currency to hold steady against the US Dollar since the US/Iran conflict began. They note a neutral Bank of Canada outlook, a weak CAD/crude correlation, and fair value (FV) for USD/CAD just below 1.36, with short-term technicals pointing to a defensive, slightly bearish tone.

CAD resilience with mild downside risks

"The CAD’s outperformance is notable, and impressive in an environment of ‘classic’ risk aversion where G10 currency moves appear to have fallen back into line with their historical norms."

"The CAD’s resilience has been remarkable and it remains the only currency to have held steady against the USD since the start of the US/Iran conflict on Saturday."

"Short-term rates markets continue to price a neutral path for the BoC, while yield spreads remain somewhat disconnected from the CAD at the moment."

"For USDCAD, our FV estimate is back below 1.36, at 1.3599."

"Neutral/bearish—USDCAD has traded defensively over the past two sessions, with steady losses following Tuesday’s ‘shooting star’ doji candle. The candle is typically seen as a bearish reversal candle."

"The RSI is drifting further below 50, suggesting renewed bearish momentum, and support looks limited between current levels and the low 1.35. We expect a near-term range between 1.3580 and 1.3680."

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