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"A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will," United States (US) President Donald Trump posted on Truth Social on Tuesday.

"However, now that we have complete and total regime change, where different, smarter, and less radicalized minds prevail, maybe something revolutionarily wonderful can happen," he added and continued:

"We will find out tonight, one of the most important moments in the long and complex history of the World. 47 years of extortion, corruption, and death, will finally end. God Bless the Great People of Iran!"

Market reaction

Markets remain risk-averse in the second half of the day on Tuesday. At the time of press, US stock index futures were down between 0.5% and 0.7%. Meanwhile, the US Dollar (USD) Index stays flat on the day near 100.00.

Societe Generale’s Kit Juckes discusses Robin Brooks’ view that the Dollar looks significantly overvalued versus G10 rate differentials and could fall sharply on a ceasefire, with Oil tumbling and safe-haven flows reversing. Juckes notes markets price no Fed hikes this year while other G10 central banks tighten, and expects a broadly range-bound Dollar if Fed policy stays unchanged.

Fed stance and ceasefire risk for Dollar

"Robin Brooks, once upon a time the Chief economist at Goldman Sachs, and then at the IIF, posted a chart on Substack showing the dollar against the other G10 currencies, and the 2y/2y forward rate differential. It shows the dollar significantly overvalued relative to rates. He argues that “A ceasefire is coming."

"Two things will get repriced quickly when that happens. Oil futures will tumble, and the Dollar will fall sharply” as safe haven inflows into the currency reverse and a politicised Fed cuts policy rates in the face of rising inflation."

"As of this morning, the rates market prices Fed Funds unchanged for the rest of this year, while the ECB is priced to raise rates by 70bp. The market expects hikes from ALL the G10 currencies except the Fed, despite the fact that the only G10 economy that is forecast to have stronger growth than the US this year, is Sweden."

"IF the Fed really does ease policy significantly at the same time as inflation rises and the Government runs accommodative fiscal policy, the dollar probably will fall. Our Fed call is for rates to be unchanged all year, which is what is currently priced by the rates market and may argue for a rather range-bound dollar from here."

"Overall, the market is long USD, albeit not dramatically so. It is also long AUD and short JPY. The EUR long has fallen dramatically from 180 thousand contracts, to 507."

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

BNY’s Head of Markets Macro Strategy Bob Savage highlights a growing divergence between the New Zealand Dollar (NZD) and Australian Dollar (AUD) as markets favor currencies backed by real assets. Despite strong New Zealand commodity prices, NZD is seeing little flow support, while AUD benefits from terms-of-trade gains and reduced hedging. Savage notes that if AUD/NZD divergence feeds into spot, the Reserve Bank of New Zealand (RBNZ) may need to respond via interest rates.

Flows favor AUD over struggling NZD

"In theory, the NZD should be able to benefit from any gains in soft commodities, but there is very little sign of this in our flows. Energy and fuel inputs will affect balance of payments as well, and NZD certainly does not have the underlying nominal or real rates that are a necessary condition for inflows."

"If anything, there will be fears that the Reserve Bank of New Zealand (RBNZ) will not be able to move sufficiently with inflation risk, which was already in place before recent events. The markets show little interest for NZD for now, but the opposite is true for AUD."

"These are two very slow-moving currencies in holdings terms (cross-border basis), but we have seen a change from broad convergence at the beginning of February to a spread of 40pp, measured by their current holdings as a percentage of their rolling 12-month averages."

"The AUD/NZD is material for New Zealand’s trade-weighted indices, and any large moves could impact the outlook for tradables inflation."

"Asset owners have materially reduced AUD hedges while adding NZD equivalents. The difference in policy rhetoric is sufficient to drive the change, while Australia also stands to benefit far more from the hard/soft commodity-based positive terms-of-trade shock."

"It seems that markets only have interest in adding to one of the two in exposures, and the choice was clear on multiple levels. If the divergence starts to translate into meaningful spot moves, the RBNZ may also need to look at a response through rates. "

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

• Silver extends its reversal from Thursday's highs above $81.00 to levels below $72.00.
• Precious metals remain on the defensive with Trump's deadline on Iran looming.
• XAG/USD shows a moderate bearish pressure halfway through the last two weeks' trading range.

Silver (XAG/USD) is showing a mild bearish momentum on Tuesday’s European trading session, with the reversal from Thursday's high, at 81.13, extending to levels below $72.00, amid vanishing hopes of a peace deal in Iran. The US Dollar remains steady as the ultimatum on Iran to reopen the Strait of Hormuz expires in a few hours.

The US and Iran rejected the peace plan submitted by Pakistan on Monday, while Iran's alternative proposal was considered “significant” but not enough by US President Donald Trump. The deadline for Iran to reopen the critical waterway expires on Tuesday at 8:00 PM Eastern Time, and Trump has threatened to “demolish” the country in one night unless a last-minute breakthrough is reached.

Technical Analysis

XAG/USD shows a mildly bearish near-term bias after failing to sustain recent highs. The 4-hour Relative Strength Index (RSI) has pulled back below the 50 line, suggesting fading upside pressure. The Moving Average Convergence Divergence (MACD) indicator holds in negative territory with a slightly negative histogram, reinforcing waning bullish momentum.

On the downside, the daily low, at the $68.30 area, might provide support ahead of the March 26 low, near $66.70. Further down, the 2026 low, at the $61.400 area, will come into the bears' focus.

To the upside, the 38.6% Fibonacci retracement of the late March sell-off, at the $75.00 area, keeps holding bulls. Further up, the pair might find sellers at the area between the March 17 high, at the $82.55 area, and the 61.8% Fibonacci retracement of the aforementioned cycle, at $83.35.

(This story was corrected on April 7 at 12:20 GMT to say Silver extends reversal from Thursday's highs above $81.00, not Monday's highs, and also to mention that the daily low at the $68.30 area, and not Monday's low, might provide support.)

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

• The Pound Sterling gives up its early gains against the US Dollar as the market mood turns risk-off.
• Iran rejects the US temporary ceasefire proposal and wants a permanent one.
• Investors await US President Trump’s response after the Tuesday deadline.

The Pound Sterling (GBP) surrenders its early gains against the US Dollar (USD) and flattens around 1.3240 during the European trading session on Tuesday. The GBP/USD pair falls back as the market sentiment turns risk-averse, following Iran’s denial of a temporary ceasefire to the United States (US).

During the press time, S&P 500 futures trade 0.35% lower below 6,600, reflecting a risk-off market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, claws back its losses and flattens around 100.00.

In the European trade, a senior Iranian official stated that Tehran rejects temporary ceasefire, and wants a permanent one in return of the Strait of Hormuz reopening along with the guarantee of no repetitive aggression, and compensation for damages.

Meanwhile, investors await US President Donald Trump’s response to Iran’s denial of Hormuz reopening ahead of his proposed deadline, which is Tuesday, 08:00 PM ET.

Over the weekend, US President Trump warned of obliterating Iranian civilian infrastructure if it doesn’t reopen the Strait of Hormuz. On Monday, Trump stated that Iran should consider this as the “final deadline”, and reiterated threats of attacking its power plants and bridges.

On the monetary policy front, investors await Federal Reserve (Fed) Open Market Committee (FOMC) minutes of the March policy meeting, which will be released on Wednesday. In the policy meeting, the Fed left interest rates unchanged in the range of 3.50%-3.75% and stated that the policy is not based on a preset approach.

Citing an unidentified senior US official, Axios reported on Tuesday that the US military conducted strikes on military targets located on Iran's Kharg Island.

Iran's semi-official Mehr News Agency also reported that Kharg island was targeted with several strikes.

Meanwhile, Iran's Revolutionary Guard sent a warning to neighbouring countries, noting that the 'restraint is over' and that they will start targeting the US' and partners' infrastructure and threatened to disrupt regional oil and gas supplies for years.

Market reaction

Markets turn risk-averse on these developments. At the time of press, US stock index futures were down between 0.4% and 0.6% on the day.

ING analysts Ewa Manthey and Warren Patterson report that Aluminium supply risks have intensified after Iranian attacks on Emirates Global Aluminium’s Al Taweelah smelter and Aluminium Bahrain’s plant. They stress that prolonged outages could remove a large share of Middle East capacity, lifting the regional deficit, while LME Aluminium prices have already risen over 10% as markets price in sustained tightness rather than brief disruptions.

Regional outages drive supply deficit

"Emirates Global Aluminium (EGA), the Middle East’s largest aluminium producer, said a full resumption of production at its Al Taweelah smelter could take up to 12 months after it was hit in an Iranian attack at the end of last week."

"A halt at EGA’s 1.6 mtpa Al Taweelah smelter, Alba’s reduced operations and earlier curtailments at Qatalum would take around 3 mtpa of capacity offline – close to half of Middle East aluminium production, lifting our supply deficit to around 2-2.5 Mt."

"Against this backdrop, LME aluminium prices are up more than 10% since the start of the Iran war, reflecting a rising geopolitical risk premium and growing concern that Middle Eastern disruptions could translate into sustained tightness rather than short-lived supply shocks."

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

Commerzbank analysts highlight that Brent has climbed above $111 per barrel as the Iran conflict continues and Trump links any ceasefire deal to free Oil traffic through the Strait of Hormus. The IEA warns against fuel hoarding during the Iran war, while OPEC+ agrees a modest quota hike for May and voices concern over attacks on energy infrastructure.

Iran conflict and OPEC+ keep Brent elevated

"Today, focus looks set to remain firmly on developments in the Middle East. While attacks have continued over the weekend, latest sources reports about a last minute ceasefire proposal and Trump's extension of a deadline to Tuesday night offer a glimmer of hope. So far, Iran has rejected a ceasefire. Meanwhile, Brent futures have risen considerably over the weekend, with oil now trading above $111/bbl."

"Trump shifts deadline from today to Tuesday 8pm E.T., threatens to strike key infrastructure by midnight if no deal is made. Says the entire country "can be taken out in one night". Trump says that free oil traffic through Strait of Hormus must be part of any deal."

"IEA warns countries against hoarding fuel during Iran war (FT). OPEC+ agrees 206K b/d quota hike for May, expresses concern over attacks on energy infrastructure."

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

TD Securities analysts highlight a record monthly rise in the Melbourne Institute Inflation Gauge, pushing headline and trimmed mean inflation to their highest non-COVID levels since 2008. At the same time, Australian household spending growth is modest and momentum is slowing. They warn that higher Oil prices after the US‑Iran war breakout skew spending risks to the downside in coming months.

Inflation spikes as spending momentum slows

"In a sign of what's to come, the headline inflation gauge rose 1.3% m/m, the largest monthly rise recorded in the series' history, to 4.3% y/y."

"The annual print is the highest since Sep 2008 if we exclude the COVID period."

"Meanwhile, the trimmed mean measure rose 0.4% m/m, with the annual core measure rising 4.4%."

"Removing the COVID period, this is the highest annual trimmed mean print since July 2008."

"Household spending rose 0.3% m/m in Feb (+0.3% m/m in Jan), to +4.6% y/y. "

"The momentum indicators show growth in spending slowing in recent months and the risks are skewed to the downside over coming months following the sharp rise in oil prices following the breakout in the US-Iran war."

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

Brown Brothers Harriman’s (BBH) Elias Haddad notes that a prolonged energy shock from the Iran conflict heightens financial stability risks and supports the Dollar beyond what rate differentials imply. With Brent still below US$120 and global risk assets stalling, BBH sees USD strength near term but maintains a cyclically neutral and structurally bearish stance on the Dollar longer term.

Energy shock underpins near term Dollar

"US-Iran ceasefire odds were pared back after both countries rejected each other’s proposal to end the war yesterday. Brent crude oil prices rebounded but remain roughly 6% below the triple top at US$120 a barrel. The recovery in global stocks and bonds stalled, while the dollar index (DXY) is consolidating just above the top-end of its multi-month 96.00-100.00 range."

"Financial markets are on edge ahead of today’s deadline. President Donald Trump threatened further strikes on Iranian energy plant and bridge if Iran failed to make a deal and reopen the Strait of Hormuz by 8:00pm Eastern time on Tuesday. Trump added it was “highly unlikely” that he would extend his new deadline."

"Unfortunately, the balance of risks points to a prolong energy shock. Iran has both the capability and the incentive to destabilize global markets and impose as much economic/political pain on the US to extract maximum concessions from its five conditions for ending the war: (i) Immediate cessation of aggression and targeted attacks, (ii) Ensuring the war will not recur, (iii) Payment of war damages and reparations, (iv) Ending of hostilities across all fronts, and (v) recognition of Iran’s sovereignty over the Strait of Hormuz."

"A more persistent energy shock raises financial stability risks because it traps central banks in restrictive policy despite unimpressive growth and puts government debt on a more fragile and unsustainable path. As such, USD can continue to overshoot the level implied by rate differentials. Dollar funding needs tend to rise in periods of financial market stress due to the dollar’s dominant role in the global financial system (trade invoicing, cross border lending, global bond issuance, FX reserves)."

"Beyond the near-term, we remain cyclically neutral on USD and structurally bearish."

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