The risk complex remains slightly positive early Thursday, mainly backed by the news suggesting a proximity to the Israel-Lebanon peace deal, as well as increasing hopes of witnessing a sooner end to the U.S.-Iran-Israel war. Meanwhile, mixed U.S. data and mostly upbeat performance of major equity indices also underpin cautious optimism in the markets before today’s key U.S.-Iran talks, facilitated by Pakistan, and the mid-tier data.
The Financial Times (FT) reported that a ceasefire between Israel and Lebanon could be close, citing Lebanese officials. This was later supported by positive remarks from President Donald Trump, which helped steady market sentiment. At the same time, reports suggested Iran may have used a Chinese satellite to track US bases, adding a more complex and potentially escalating layer to the conflict, with possible effects on US–China relations and modern warfare.
On Wednesday, the Federal Reserve (Fed) Beige Book showed slight to modest growth across 8 of 12 districts. Further, the US National Association of Home Builders (NAHB) April housing market index came in at 34 versus 37 expected, while the Empire State Fed April manufacturing index came in at +11.0 versus -0.5 expected.
Further, Fed’s Beth Hammack signaled a “patient policy” approach as the Fed manages a five-year inflation miss.
Against this backdrop, the US Dollar Index (DXY) dropped to a fresh six-week low. That said, EURUSD climbed to its highest level since February 27, GBPUSD reached a two-month high, and USDJPY fell to a one-week low. Elsewhere, AUDUSD surged to a 46-month high, NZDUSD rose to a five-week high, and USDCAD declined to a three-week low.
Gold recovered after the previous session’s pullback from a one-month high, while Crude Oil struggled after touching a three-week low earlier. Bitcoin (BTC) and Ethereum (ETH) remained under pressure after giving back gains from a one-month high in the previous session. That said, the equity markets ended mixed in the U.S. The Dow Jones Industrial Average (DJIA) closed lower, while the S&P 500 and Nasdaq posted record closing highs with modest gains, and Asia-Pacific equities edged higher.
EURUSD rises to a nearly seven-week high as the softer US Dollar (USD) combines with hawkish signals from the European Central Bank (ECB). ECB board member Isabel Schnabel kept a balanced tone, stating that the euro area remains in a relatively strong position after bringing inflation back to target before the war. She added that policy is broadly neutral, allowing the ECB time to assess whether the Iran shock could create lasting second-round inflation effects. ECB policymaker Muller also said a rate move at the April meeting cannot be ruled out, reinforcing the view from ECB sources that they are cautiously leaning toward a possible April rate hike.
The U.S. Dollar’s weakness, joined by an upbeat UK update and hawkish bias surrounding the Bank of Japan (BoJ), is expected to propel GBPUSD toward a two-month high, as well as drag the USDJPY to the lowest level in a week.
The UK expanded its energy bill relief scheme for industries due to rising costs.
Japan remained a key focus early Thursday as Finance Minister Satsuki Katayama said Tokyo and Washington agreed to strengthen communication on exchange rates after talks with US Treasury Secretary Scott Bessent. She also repeated that authorities are closely watching FX movements, warning that oil-driven volatility is impacting currencies and the wider economy. The Japanese Yen (JPY) edged slightly higher, with intervention risk still present. The International Monetary Fund (IMF) said the Bank of Japan (BOJ) can look past inflation caused by the Iran war shock.
Cautious market optimism, along with a weaker US Dollar (USD) and China-related updates, supported commodity-linked currencies such as AUDUSD, NZDUSD, and USDCAD. As a result, AUDUSD surged to a 46-month high, NZDUSD climbed to a five-week high, and USDCAD dropped to a three-week low.
Economic data elsewhere showed mixed signals. Australia’s labour market stayed strong, with employment rising by 17.9K (expected 20K) and unemployment steady at 4.3%, reinforcing expectations that the Reserve Bank of Australia (RBA) still has room to tighten policy. In Canada, February manufacturing sales increased by 3.6%, slightly below the 3.8% forecast.
In China, the first-quarter (Q1) Gross Domestic Product (GDP) expanded by 5.0% year-on-year (y/y), beating the 4.8% estimate. However, other indicators remained weak, with soft retail sales and ongoing stress in the property sector highlighting a fragile recovery.
Oil prices traded in a narrow range after previously hitting a three-week low, suggesting consolidation following recent volatility, while supply risks linked to Hormuz disruptions remain unresolved. Data from the US Energy Information Administration (EIA) showed crude oil inventories declined by -913K, compared to an expected increase of +154K.
Gold records modest gains, recovering from the previous day’s losses, while Bitcoin (BTC) and Ethereum (ETH) also move slightly higher. Asia-Pacific shares trade mixed but mostly positive, while US benchmark indices close mixed despite continued strength in technology stocks.
Technology shares in the US delivered another strong session, with the Nasdaq extending its rally to an 11th consecutive day. The S&P 500 rose 0.8% to its first record closing high since January 27, while the Nasdaq gained 1.6% to reach its first record close since October 29. Sentiment around artificial intelligence (AI) improved after the latest Mythos model from Claude was leaked, helping tech stocks stabilize and reviving the AI-driven momentum seen in 2025. In addition, reports suggested the Pentagon is exploring plans to boost weapons production with US manufacturers, pointing to sustained defense demand and potential support for wider industrial sectors.
Looking ahead, Eurozone inflation, European Central Bank (ECB) Monetary Policy Meeting Accounts, US Jobless Claims, Philadelphia Fed Manufacturing Index, and Industrial Production will shape Thursday’s economic calendar.
Markets may still need a stronger catalyst, such as concrete progress toward a peace deal between the United States and Iran, to drive the next major move. However, recent earnings have been broadly solid, with financials supported by strong results throughout the week, keeping a tilt in favor of risk assets. Central bank signals have also been relatively supportive for the real economy, while recent economic data since the start of the war has mostly held up, reinforcing expectations of continued US Dollar (USD) weakness and further gains across major currencies, Antipodeans, equities, and cryptocurrencies, along with mild upside in commodities.
Against this backdrop, EURUSD could extend to fresh multi-day highs, while AUDUSD may stay firm near multi-year highs. Gold, Bitcoin (BTC), and Ethereum (ETH) could also edge higher. Meanwhile, Crude Oil may face further downside if progress is seen toward a US–Iran peace deal. Softer US data could keep broader assets supported while adding downward pressure on the US Dollar (USD).
May the trading luck be with you!
