US Jobs Data and Iran Talks Drive Markets

US jobs data and Iran talks drive global markets as traders await Friday’s non-farm payrolls report carefully.

Asian markets opened Thursday without major economic data releases from Japan, Australia, New Zealand, or China, leaving investors to focus on geopolitical developments and upcoming US employment figures. Progress in US-Iran negotiations continued to ease supply concerns, pulling crude oil prices lower, while weaker Asian equity markets generated modest safe-haven demand for gold. The US dollar held mostly steady ahead of the jobless claims release, keeping major currency pairs including USD/JPY, AUD/USD, and NZD/USD largely range-bound through the session.

US Jobs Data and Iran Talks Drive Markets

The US dollar entered Thursday on the back foot as traders adopted a wait-and-see approach ahead of today’s Initial Jobless Claims and Friday’s critical Non-Farm Payrolls report. Improving geopolitical sentiment reduced safe-haven demand, while markets continued to weigh whether the US economy is slowing enough to prompt a shift in the Federal Reserve’s policy direction.

At its July 28-29 meeting, the FOMC held the federal funds rate unchanged at 3.50% to 3.75% for the fifth consecutive meeting, voting 9-3 to maintain rates. Three policymakers, Beth Hammack, Neel Kashkari, and Lorie Logan, dissented in favour of an immediate 25 basis point hike, reflecting deepening divisions within the committee over persistent inflation. Also, Chair Kevin Warsh stressed that future decisions remain strictly data-dependent, with the next meeting scheduled for September 15-16.

Stronger-than-expected jobs data today would likely support the dollar by reinforcing a higher-for-longer rate narrative, while softer figures would increase pressure on the greenback and lift expectations of a more dovish Fed path.

Gold Extends Rally for Fourth Straight Session

Gold climbed for a fourth consecutive session Thursday, reaching its highest level in approximately seven weeks. A weaker US dollar, lower Treasury yields, and growing expectations of a less aggressive Federal Reserve combined to drive bullion higher. Additionally, progress toward reopening the Strait of Hormuz eased oil prices and reduced near-term inflation expectations, providing further support for gold. The US 10-year yield held at 4.701, with UK gilts at 5.038 and German bunds at 3.156. Gold traded at $4,056.40, up 0.50%, while silver slipped 0.59% to $57.745.

Euro Trades with Cautious Optimism

The euro held a cautiously positive tone as improving Eurozone economic data supported sentiment. Business activity across the euro area expanded to an eight-month high in July, driven by a services sector rebound and stable manufacturing output. July inflation accelerated to 2.9%, remaining above the ECB’s 2% target, largely due to higher energy prices, strengthening market expectations for another rate hike at the September meeting.

At its July 22-23 meeting, the ECB held all three key rates unchanged, keeping the deposit facility at 2.25%, the main refinancing rate at 2.40%, and the marginal lending facility at 2.65%. Policymakers reiterated a data-dependent approach with no pre-commitment to a future rate path. The next ECB meeting takes place September 9-10.

Swiss Franc Remains Well-Supported

The Swiss franc retained its safe-haven appeal Thursday despite improving global risk sentiment. Switzerland’s July CPI eased to 0.4% annually from 0.5% in June, sitting comfortably within the SNB’s 0% to 2% target range. The softer reading reinforces expectations that the SNB will keep its policy rate at 0.00% while standing ready to intervene if excessive franc strength threatens exporters. The next SNB meeting is scheduled for September 24.

Pound Trades Cautiously Ahead of BoE Decision

Sterling navigated a cautious session as investors assessed the UK monetary policy outlook ahead of the Bank of England’s July 29-30 meeting. Recent stronger UK services activity and improving business confidence in July offered some support, reducing fears of a sharper economic slowdown. The MPC previously voted 7-2 to hold the Bank Rate at 3.75% in June, with Megan Greene and Huw Pill pushing for a 25 basis point increase. UK CPI fell to 2.6% in June from 2.8% in May, though services inflation remained sticky at 3.6%, keeping policymakers cautious. The next MPC meeting follows on September 17.

Canadian Dollar Holds Firm on Trade Data

The Canadian dollar started Thursday on relatively firm footing after strengthening during Wednesday’s session. Canada’s trade surplus expanded to its highest level in four years, reinforcing confidence in economic resilience despite softer crude oil prices. At its July 15 meeting, the Bank of Canada held its overnight rate at 2.25% for the sixth consecutive decision, extending its policy pause. Headline CPI ran at approximately 3.2% year-over-year in May, with the Bank projecting inflation to return to 2% by early 2027. The next BoC decision falls on September 2.

Oil Softens on Iran Diplomacy and Rising Inventories

Oil markets traded with a bearish bias Thursday as hopes of a US-Iran peace agreement and progress toward reopening the Strait of Hormuz eased supply concerns. Rising US crude inventories added further downward pressure, with Brent crude slipping 0.98% to $87.23 per barrel and WTI declining 0.91% to $83.69. Traders remain alert to geopolitical headlines that could quickly reverse sentiment. The US Jobless Claims report at 12:30 PM GMT stands as the next major catalyst, with the potential to influence both dollar direction and broader energy demand expectations.

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