Geopolitical Tensions Escalate in Strait of Hormuz

Tensions between the United States and Iran have intensified, centering on control over the strategic Strait of Hormuz. The U.S. administration stated it would ensure the waterway remains open for international shipping, while Iran issued warnings against unauthorized transit, creating a risk-off market mood and pushing oil prices higher on supply disruption fears.

Precious Metals Weaken on Inflation and Fed Outlook

Despite a risk-averse environment, both gold and silver prices faced downward pressure, with gold drifting below $4,100. The decline is attributed to rising oil prices, which are stoking inflation concerns and reinforcing market expectations for a future Federal Reserve interest rate hike. A more hawkish Fed outlook tends to weigh on non-yielding assets like precious metals.

US Dollar Finds Support Amid Market Uncertainty

The US Dollar experienced mixed trading but found underlying support from both geopolitical risks and persistent inflation, which could keep the Federal Reserve on a hawkish path. The US Dollar Index remained in a multi-week range as market participants await key US Consumer Price Index (CPI) data and Fed official commentary for further clues on monetary policy.

Divergent Central Bank Policies Drive Currency Moves

Global currency markets saw varied performance as central banks responded to domestic and international pressures. The Swiss National Bank was noted to be actively intervening to limit safe-haven appreciation of the franc, while the Canadian dollar strengthened alongside surging oil prices. In contrast, the Japanese Yen weakened due to Japan's reliance on energy imports.