Middle East Tensions Rattle Markets

Renewed geopolitical tensions in the Middle East are influencing market sentiment after the United States conducted military strikes in Iran, prompting threats of retaliation. This uncertainty has contributed to volatility in crude oil prices and has provided some support for safe-haven assets like the Japanese Yen, while markets continue to monitor developments around the strategic Strait of Hormuz.

Precious Metals Face Headwinds

Gold and silver prices remained subdued as the combination of a tense geopolitical climate and prospects for continued central bank tightening weighed on the non-yielding assets. Silver held below $77 per ounce amid the US-Iran uncertainty, while gold prices also declined. Separately, India's gold market experienced an unusual dynamic, with the metal trading at a rare discount following a government hike on import tariffs.

Divergent Rate Paths for Australian and New Zealand Dollars

Central bank actions and economic data created diverging paths for the currencies of Australia and New Zealand. The New Zealand Dollar gained strength after the Reserve Bank of New Zealand held its interest rate at 2.25% but signaled that future hikes may be necessary to address inflation. In contrast, the Australian Dollar faced selling pressure after data revealed a slowdown in annual consumer price inflation for April.

Bank of Japan Policy and Yen in Focus

The Japanese Yen attracted some buying interest amid ongoing speculation that Japanese authorities could intervene to support the currency. Meanwhile, Bank of Japan officials stated that financial conditions remain accommodative, though Governor Ueda warned that temporary oil price shocks could become persistent. This comes as data showed Japan's corporate service prices rose 3% in April, indicating some underlying price pressures.