Markets Tread Carefully as US-Iran Tensions Rattle Oil, FX

Global financial markets adopted a cautious stance Friday as traders weighed escalating US-Iran military exchanges against signals that diplomacy may not be entirely dead. President Trump publicly claimed Iran had contacted him seeking a deal — an echo of the same dynamic that preceded a prior ceasefire attempt — offering a flicker of de-escalation hope even as fresh reports of mutual strikes continued to cross newswires.

Oil markets bore the brunt of the uncertainty. WTI crude whipsawed during the European session, dropping to roughly $72.40 per barrel before recovering to $74.01, a gain of 0.7% on the day, as supply-disruption fears kept buyers returning despite the diplomatic noise. Gold similarly climbed 0.7% to $4,105, while silver added 1.1% to $58.98, reflecting persistent safe-haven demand.

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The US dollar weakened early in the session after Trump's deal comments but quickly recouped most losses. EUR/USD briefly touched 1.1450 before retreating to 1.1425, up just 0.1%, and GBP/USD pulled back to flat near 1.3385 after tagging a session high of 1.3430. New Zealand dollar led currency gains on the day, while the greenback and Canadian dollar lagged.

Equity futures held modest gains, with S&P 500 contracts up 0.2% and Nasdaq futures advancing 0.7% as chipmakers including Micron and Sandisk each rose nearly 5% in pre-market trading, offering a potential bounce after a sluggish prior session. Ten-year US Treasury yields edged 2 basis points higher to 4.587%, retracing an earlier dip toward 4.56%. The European Central Bank's own accounts revealed all members see inflation risks tilted to the upside, while ECB official Escriva cautioned that monetary policy cannot react to every geopolitical shift — a stance likely to be tested the longer the Middle East situation festers.

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