Forex News

• The US signals it may release Strategic Petroleum Reserve Crude through swaps to ease short-term supply disruptions.
• Washington says military operations could last weeks, while naval escorts for vessels may be possible later this month.
• Oil prices remain supported amid escalating tensions around Iran and risks to shipping through the Strait of Hormuz.

In interviews with CNBC and CNN reported by Reuters, US Energy Secretary Chris Wright said that any release of Oil from the Strategic Petroleum Reserve (SPR) would likely take the form of swaps, designed to address short-term supply disruptions without direct costs to taxpayers. He added that such a release could help the market “get through a few weeks of dislocation”.

The remarks come amid rising tensions involving Iran and renewed concerns about the security of the Strait of Hormuz, a key maritime chokepoint for global Oil flows. Wright stressed that reopening the strait is a priority and warned that Iran’s ability to threaten regional shipping must ultimately be neutralized.

According to the Energy Secretary, any military operation related to the crisis would likely take weeks rather than months. He also indicated that US naval escorts for commercial vessels are not currently in place, although such measures could become possible before the end of the month.

Wright added Oil markets in the Western Hemisphere are “not really tight” compared with Asia.

Market reaction

The comments didn’t get significant market attention. West Texas Intermediate (WTI) US Oil surges on Thursday, gaining 5.10% and trading around $91.75 per barrel at the time of writing.

TD Securities Senior Commodity Strategist Daniel Ghali notes that Shanghai silver arbitrage signals strong Chinese demand, contrasting with cautious Western investors after the Iran conflict. London OTC markets are still absorbing flows and lease rates point to better availability. This backdrop supports TD Securities’ view that global Silver inventory coverage is improving despite earlier tightness.

Shanghai arb signals robust buying

"Shanghai silver arb points to strong Chinese demand. The shell-shock from the recent conflict is keeping Western investors cautious, but the trend in Shanghai silver arb points to a resurgence in Chinese demand for silver following the unprecedented retail demand for silver in the early months of 2026."

"This demand impulse has kicked off in the days leading up to the war in Iran."

"For the time being, London OTC markets continue to absorb this demand well, with silver lease rates continuing to point to improving availability."

"This contrasts sharply with the early-year market context, and lends strength to our view of rising inventory coverage in global silver markets."

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

Rabobank’s Senior FX Strategist Jane Foley notes that despite shifting rate expectations elsewhere in G10, surveys show BoJ watchers still expect a rate hike by the end of June. The bank underlines that higher energy prices worsen Japan’s terms of trade and create uncertainty over April policy, with upcoming guidance from Governor Ueda seen as crucial for near-term Japanese Yen performance.

Energy shock complicates BoJ rate outlook

"The Reuters survey indicated that BoJ watchers continue to expect the BoJ to hike rates next by the end of June."

"The market will be watching the BoJ’s March 19 meeting for any clues as to the risks regarding an April move. The most recent Bloomberg survey suggests that more than one third of participants already expect a hike next month."

"For an energy importer such as Japan, however, higher prices of oil and gas will lead to a deterioration in the terms of trade."

"The BBG survey indicates a lack of consensus as to whether higher energy prices will increase the chances of a BoJ rate rise in April on the back of the inflation implications or reduce the risks due to the headwinds to growth."

"Next week’s guidance from BoJ Governor Ueda could thus be instrumental for the near-term performance of the JPY."

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

TD Securities strategist Pooja Kumra notes that ECB officials have turned more hawkish as energy‑driven inflation risks re‑emerge, but the bank’s base case is still for only one rate hike toward late 2026. Markets have swung from modest cuts to pricing cumulative 2026 hikes, while ECB research suggests long lags from policy to inflation, especially for services.

Market shifts from cuts to modest 2026 hikes

"Research from the ECB suggests that a 50bp hike can reduce inflation by 0.2-0.3% within 12-18 months while service inflation requires more than 24 months for transmission."

"This big lag also suggests why the ECB members have started to sound hawkish without waiting for the story to unfold."

"Markets have shifted sharply from pricing 8-9bp of ECB cuts for this year (as of 27 February) to pricing a cumulative 40bp of hikes in 2026."

"Our base case remains for the ECB to deliver one rate hike towards the end of 2026."

"Should the response shift towards aggressive fiscal support, central banks (particularly those already operating near neutral such as the ECB) may be less constrained by growth risks when considering further hikes."

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

• USD/JPY trades around 158.90 on Thursday, remaining broadly unchanged on the day.
• Escalating tensions in the Middle East fuel risk aversion and could support the Japanese Yen as a safe-haven currency.
• Markets expect the Federal Reserve to keep rates unchanged at its March 18 meeting after inflation data met expectations.

USD/JPY trades around 158.90 on Thursday at the time of writing, showing little change on the day. The pair remains close to its yearly highs, supported by a relatively firm US Dollar (USD) despite a tense geopolitical backdrop and growing expectations that Japan may gradually normalize its monetary policy.

Geopolitical developments in the Middle East are drawing strong market attention. Iran has launched what it described as its most intense operation since the beginning of the war, notably attempting to disrupt traffic through the Strait of Hormuz, a crucial passage for global Oil flows. At the same time, the Israel Defense Forces announced a wide-scale wave of strikes targeting Hezbollah infrastructure. In this environment, traders are closely monitoring the evolution of the conflict, as any escalation involving Iran, its regional neighbors, the United States (US) or Israel could strengthen demand for safe-haven assets such as the Japanese Yen (JPY) and weigh on USD/JPY in the near term.

On the macroeconomic front, data released Wednesday by the Bureau of Labor Statistics showed that the US Consumer Price Index (CPI) rose 0.3% MoM in February, compared with 0.2% previously, in line with market expectations. Core inflation, which excludes volatile food and energy prices, increased by 0.2% MoM after a 0.3% rise previously, also matching forecasts. Market participants largely looked through the report and instead focused on rising Oil prices, which could push headline inflation higher in the coming months.

Markets now widely expect the Federal Reserve (Fed) to keep interest rates unchanged at its upcoming policy meeting on March 18. However, the outlook for energy-driven inflation and persistent geopolitical risks continues to provide support for the US Dollar.

Several financial institutions are urging caution at current levels. Analysts at DBS note that the pair is testing an important resistance zone around 159-160, while the Bank of Japan (BoJ) could deliver a hawkish hold at its March 19 meeting as it continues its path toward policy normalization. According to DBS, a diplomatic de-escalation in the Middle East, potentially linked to upcoming discussions between the US and China, could lower energy prices and weaken the current fundamental support for USD/JPY.

Meanwhile, analysts at MUFG argue that rising energy prices represent a negative terms-of-trade shock for Japan, which may lead authorities to tolerate a weaker JPY in the near term. This situation could raise the threshold for foreign exchange intervention, even as expectations grow that the Bank of Japan could deliver another rate hike as soon as April.

• Initial Jobless Claims decreased to 213K vs. the previous week.
• Continuing Jobless Claims went down to 1.850M.

According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance went down to 213K for the week ending March 7. The latest print came in short of initial estimates (215K) and was a tad lower than the previous week’s 214K (revised from 213K).

Additionally, the 4-week moving average decreased by 4K, bringing it to 212K from the revised average of the previous week (216K).

The report also indicated that Continuing Jobless Claims fell by 21K to 1.850M for the week ending February 28.

Market reaction

The Greenback adds to the weekly recovery on Thursday, prompting the US Dollar Index (DXY) to hit three-day highs around 99.50. The Greenback’s improvement remains well underpinned by unabated tensions in the geopolitical landscape.