MARKET REPORT
Geopolitical Shockwaves: Markets Whipsaw on Iran Crisis
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- Dollar volatility surges as US-Iran ceasefire collapses.
- Trump announcing Strait of Hormuz blockade triggers haven flows and oil price spike.
Recap
Another volatile week for FX markets. The US dollar lost ground after Trump signalled a two‑week truce with Iran and softer‑than‑expected CPI data further reduced demand for the greenback. Some of these have been reversed over the weekend after 21 hours of peace talks in Islamabad ended in collapse, with Trump announcing a full naval blockade of the Strait of Hormuz. Haven demand for USD returned swiftly, oil prices spiked, and the mid-week gains G10 currencies vs USD were largely unwound.Today
Market rates
*Daily move - against G10 rates as of 5pm BST on 10.04.26
** Indicative rates - interbank rates as of 5pm BST on 10.4.26
Data points
Click here for a calendar of upcoming economic events Our thoughts
Today's data calendar is light, with geopolitical developments firmly in the driving seat. Oil is back above $100 per barrel, stoking fresh inflation concerns that could force central banks to reconsider their rate cut trajectories. The failure of US-Iran peace talks has shifted market's focus squarely to inflation risks, now expecting rates to stay higher for longer. ECB Governing Council member Olaf Sleijpen warned this weekend that persistently high oil prices will ultimately feed through to other products and wage formation – amplifying the inflationary picture in Europe and adding to speculation of higher rates for longer.
For USD, the geopolitical premium should provide continued support, particularly against growth-sensitive currencies. CAD faces a more mixed picture, with rallying oil prices providing some offset against the broader risk-off backdrop.
On the data front, Tuesday's US PPI is the standout release of the week, with headline PPI forecast at 1.2% MoM – a number that could already be looking conservative given the oil price spike. Thursday brings UK industrial production and trade data, Eurozone final CPI, US jobless claims and industrial production. USD is likely to remain well supported on haven flows, whilst the risk-off backdrop is likely to cap any meaningful gains for GBP and EUR.
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