The global financial markets remain under the shadow of escalating geopolitical tensions, particularly after reports emerged that former President Donald Trump is contemplating direct US military involvement through strikes on Tehran. Market sentiment is increasingly strained as volatility rises, reflecting investor fears over the potential escalation of conflicts in the Middle East.
In terms of monetary policy, Federal Reserve Chairman Jerome Powell reiterated that the Fed will not rush to cut interest rates and will continue to rely on upcoming economic data. The focus of the market has shifted to the release of important US data tonight, specifically the Philadelphia manufacturing index, seen as a key early indicator of economic activity. This data has the potential to act as a new catalyst for market direction in the near term amid heightened global uncertainty.
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Here’s data from Trading Central:
US Philadelphia manufacturing data at 19:30 WIB; forecast 1 vs previous -4.
GOLD
The sell-off in gold persists during the European session, as prices hit a new low of $3,340 per troy ounce. This pressure stems from the Fed’s decision to keep interest rates unchanged and signals indicating that they do not perceive an immediate need for cuts, while still depending on economic data to guide policy.
Moreover, expectations regarding an improvement in the Philadelphia manufacturing data tonight add further pressure on gold, as they could enhance the demand for the US dollar.
OIL
Oil prices have remained stable around $73.70 per barrel during the European session, with market focus on geopolitical tensions in the Middle East. The White House has indicated that a final decision regarding US involvement in the Iran-Israel conflict will be made in the coming two weeks.
This uncertainty raises concerns about potential disruptions in oil supply from the region, which could support oil prices through the US session tonight.
EURUSD
EURUSD has sustained gains from the Asian session into Europe, reaching a daily high of 1.1523. Improved risk sentiment, driven by Trump’s deadline before deciding on strikes against Iran, has bolstered interest in riskier assets like the euro.
However, the projected strengthening of the Philadelphia manufacturing index could temper this upward momentum, considering the potential pushing of the US dollar.
GBPUSD
After a brief rally at the start of Friday’s trading, GBPUSD came under pressure following a steep decline in UK retail sales, which fell to -1.3%. However, as the US session approaches, the pair has regained some strength.
Volatility in GBPUSD is expected to remain high, given the potential for geopolitical escalation from the US towards Iran and the positive projections for US manufacturing data tonight.
USDJPY
USDJPY has weakened to around 145.248 during the European session. Demand for the yen has increased as market interest in safe-haven assets rises amidst growing geopolitical tensions.
Nevertheless, the potential strengthening of the US dollar from this evening’s economic data may mitigate further declines in this pair.
NASDAQ
The Nasdaq briefly rose to reach an intraday record of 21,948 but reversed course to trade lower during the European session. The market is now cautious following Trump’s statements regarding the possibility of an attack on Iran within the next two weeks.
This uncertainty could pose a psychological burden for the Nasdaq, with further pressure likely to occur in the US session tonight.
