06/03/2026 - 08:07 UTCThe USDX climbed 0.27% on Thursday, maintaining its resilience near the 99.00 level. While the Greenback saw some minor fluctuations, it ultimately gained ground as intensifying Middle East hostilities drove safe-haven flows. With the war entering its seventh day, including drone strikes on a Bahraini refinery and the suspension of U.S. embassy operations in Kuwait, investors are increasingly pricing in a "higher-for-longer" interest rate environment. This hawkish shift is reinforced by Federal Reserve officials who remain prepared to consider further hikes should energy-led inflation persist above target.
In the energy markets, WTI Oil surged 4.58% on Thursday, with prices rallying toward $78.80. The benchmark is currently pacing for a weekly gain of over 17.5% as the effective closure of the Strait of Hormuz halts global shipments. The rally comes despite the Trump administration signaling it is reviewing emergency measures to stabilize prices, including the release of strategic reserves and the deployment of naval escorts for tankers. However, as the IRGC vows to intensify retaliatory strikes, the risk of a prolonged supply-side shock remains the primary tailwind for WTI Oil.
Conversely, Gold fell 1.53% on Thursday, sliding toward the $5,085 level during early Friday trade. The precious metal faced significant pressure as the strengthening USDX and rising Treasury yields made non-yielding bullion less attractive. Analysts suggest the decline is being driven by a "flight to liquidity," where investors favor cash and yields over commodities. While the escalation of missile strikes across the Gulf provides an underlying safe-haven floor, the immediate impact of renewed inflation fears and a dominant Greenback has forced a sharp correction in Gold prices.
Equity markets in Asia displayed a mixed performance on Friday but remained on track for significant weekly losses as the Middle East conflict entered its seventh day. Major oil-importing economies faced a difficult close to the week, with the Korea 200 edging 0.20% lower, cementing a staggering weekly plunge of nearly 12% for Seoul’s benchmark. In China, investor sentiment was slightly more resilient as markets processed the stimulus pledges from the "Two Sessions" meetings. The China SSE rose 0.38% and the China SZSE gained 0.60%, though both indices remain down by more than 1% on the week. Meanwhile, Hong Kong 50 jumped 2.06% in a late-week recovery, though it still faces a 3% weekly decline. In Tokyo, the Japan 225 advanced 1.63% as local bank stocks found support from rising global bond yields, yet the index is still bracing for a 6% total loss over the last five sessions.
The main US equity indices moved lower on Thursday, led by a slide in the blue-chip Dow, as investors weighed geopolitical risks against a string of resilient domestic labor and services data. The technology sector experienced renewed turbulence following reports that the Trump administration is drafting rules to require U.S. approval for nearly all global exports of AI accelerators. These proposed trade restrictions triggered a sell-off among semiconductor leaders, causing Nvidia (NVDA) to drop 4.79% to hit session lows as its typical safe-haven status faltered. In contrast, Broadcom (AVGO) edged up 0.2%, maintaining its resilience after a quarterly beat and an upbeat AI revenue forecast of $10.7 billion. Supported by a new $10 billion buyback program, Broadcom’s performance underscores a growing divide between firms hit by regulatory shifts and those successfully capturing immediate enterprise AI demand.
The focus now shifts entirely to Wall Street and the impending release of the U.S. nonfarm payrolls report. Investors are searching for definitive clues regarding the strength of the American labor market and how the Federal Reserve will navigate the dual pressures of a cooling job market and energy-driven inflation. With U.S. futures currently trading flat, market participants are bracing for potential volatility as the week’s high-impact data cluster culminates against a backdrop of severe geopolitical uncertainty.
The EUR/USD pair moved lower on Thursday, slipping about 0.24% as risk-averse market sentiment strengthened the US Dollar. The US Dollar Index (DXY) advanced amid rising geopolitical tensions in the Middle East, pushing the pair closer to the 1.1600 level ahead of Friday’s trading session.
Fresh US labor market data reinforced the view of a resilient economy. Initial Jobless Claims for the week ending February 28 came in at 213,000, slightly below market expectations of 215,000, signaling continued strength in the labor market.
In Europe, minutes from the European Central Bank’s latest meeting revealed that policymakers decided to leave interest rates unchanged. Officials discussed the outlook for inflation in the euro area, suggesting that price pressures could potentially fall further below the ECB’s 2% target.
However, the meeting took place before the escalation of tensions between the United States and Iran. The conflict has since altered the global economic outlook, particularly for Europe, which remains heavily dependent on energy imports.
Investors will closely watch Friday’s economic releases. In the eurozone, markets will receive updated employment data and fourth-quarter 2025 Gross Domestic Product (GDP) figures. Comments from ECB President Christine Lagarde are also expected to attract attention.
In the United States, the focus will be on January Retail Sales and the February Nonfarm Payrolls report. Economists expect payroll growth of around 59,000 jobs, while the unemployment rate is projected to remain unchanged at 4.3%.
Gold prices declined on Thursday, with the precious metal slipping to around $5,085 as a stronger US Dollar weighed on demand. Investors are now turning their attention to the upcoming US February employment report, which is expected to provide fresh direction for markets.
Escalating tensions in the Middle East have driven oil and natural gas prices higher, reviving concerns about persistent global inflation. As a result, traders have scaled back expectations for further interest rate cuts from the Federal Reserve. The shift in policy expectations has supported the US Dollar, putting additional pressure on dollar-denominated assets such as gold.
Despite the current decline, ongoing geopolitical tensions could help limit gold’s losses. Iran intensified military activity across the Gulf on Thursday, launching a new wave of missile and drone strikes targeting locations in the United Arab Emirates, Bahrain, Qatar, and Kuwait.
Iranian Foreign Minister Abbas Araghchi stated that Tehran has not requested a ceasefire and has no plans to enter negotiations. Meanwhile, Iran’s Islamic Revolutionary Guard Corps warned that retaliatory attacks are likely to escalate in the coming days, keeping geopolitical risks elevated and potentially supporting demand for safe-haven assets such as gold.
Oil prices steadied in Asian trading on Friday after a strong multi-day rally, with markets still on course for a sharp weekly increase as escalating tensions in the Middle East raise concerns about potential supply disruptions.
Traders appeared to take profits after the sharp rally earlier in the week, but prices remained supported by ongoing geopolitical tensions and concerns over the safety of key global energy routes.
The conflict in the Middle East entered its seventh day on Friday, with hostilities involving the United States, Israel, and Iran continuing to escalate. Missile strikes, retaliatory attacks, and disruptions affecting regional energy infrastructure have heightened uncertainty in global oil markets.
Attention has also focused on the Strait of Hormuz, a strategically vital waterway between Iran and Oman that serves as one of the world’s most important oil transit routes.
Approximately 20% of the global oil supply passes through the Strait of Hormuz each day, making it a key chokepoint for international energy trade. Any disruption to shipping through the strait could significantly tighten global supply and drive oil prices even higher.
In an effort to ease some supply concerns, the United States has allowed the sale of Russian oil to India for a period of 30 days. While the move may provide short-term relief to markets, analysts caution that it is unlikely to significantly alter the broader outlook.
US equities finished Thursday’s session in negative territory, although major indexes recovered from deeper intraday losses. Rising oil prices amid escalating tensions in the Middle East raised fresh inflation concerns, while weakness in semiconductor stocks added further pressure after reports of potential new US restrictions on artificial intelligence chip exports.
Investor sentiment toward semiconductor companies weakened after reports that the US government is preparing new regulations that could restrict global shipments of advanced AI chips without Washington’s approval.
The proposed rules would require companies to seek authorization for exports of AI accelerators produced by major chipmakers such as Nvidia and AMD. The measures would significantly expand existing export controls, which currently apply to roughly 40 countries.
Geopolitical developments remained a key driver for markets. The conflict in the Middle East entered its sixth consecutive day as Iran launched a new wave of missile attacks on Israel.
Political uncertainty in Iran has also increased after Mojtaba Khamenei, the son of the country’s slain supreme leader, emerged as a leading candidate to succeed him. US officials indicated that Washington would oppose his leadership.
Recent economic data has reinforced the view that the US economy remains resilient. A private payrolls report released earlier this week showed stronger-than-expected job growth in February. Additional labor market indicators released Thursday also pointed to continued strength. Challenger job cuts dropped sharply to 48,307 in February from 108,435 in January, while initial jobless claims held steady at 213,000—below expectations of 215,000.
Attention now turns to Friday’s closely watched Nonfarm Payrolls report for further clues on the health of the labor market.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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