Geopolitical Developments Boost Risk Appetite

Market sentiment improved significantly on reports that the United States and Iran are nearing a deal to end their conflict, reducing geopolitical tensions in the Middle East. This news spurred a risk-on mood, leading to gains in global equity markets and a sharp drop in crude oil prices as fears over supply disruptions through the Strait of Hormuz subsided. The shift in risk appetite also caused the US Dollar Index (DXY) to weaken considerably against its peers.

Gold and Silver Rally on Weaker Dollar

Gold prices rose above $4,650, holding near a one-week high, as hopes for a US-Iran peace accord applied downward pressure on the US Dollar. Similarly, silver experienced a significant rally, erasing previous losses to trade above $76.00 per ounce, benefiting from the broad-based dollar weakness.

Japanese Yen Strengthens on Suspected Intervention

The Japanese Yen strengthened sharply against major currencies in a move widely attributed to suspected intervention by Japanese authorities aiming to support the currency. The sudden rally caused notable drops in currency pairs such as USD/JPY and GBP/JPY, pulling them down from recent highs.

Global Central Banks Follow Divergent Paths

Central banks demonstrated varied policy approaches, with the Reserve Bank of Australia hiking its key interest rate by 25 basis points to address inflationary pressures. In contrast, central banks in Poland and Sweden were expected to keep their policy rates on hold, though they maintained a hawkish bias and readiness to act if needed.