Global markets are reacting to shifting geopolitical signals as the US deadline for Tehran regarding the Strait of Hormuz appears to have been extended by one day. Initial reactions were defensive, with investors favoring the dollar and oil while reducing exposure to risk. However, emerging discussions about a potential 45-day ceasefire, reportedly mediated by several countries, have improved sentiment despite skepticism from those involved. As trading volumes remain subdued, the dollar has reversed earlier gains and is now weaker against major and emerging currencies. Oil prices remain elevated near $110, reflecting persistent uncertainty and the binary nature of market expectations.

Asia Pacific Markets

Currency dynamics in Asia show relative stability, particularly with the offshore yuan holding within a narrow recent range due to holiday conditions in mainland China. This stability has increased its appeal among investors, similar to Chinese government bonds, whose yields have remained largely unchanged since the conflict began. In contrast, global bond yields have climbed notably. The Japanese yen saw limited volatility, with no clear signs of intervention from authorities despite testing higher levels. 

European Markets

European currencies have rebounded modestly following earlier weakness. The euro recovered from recent lows and moved above pre-weekend highs, approaching key resistance levels as ceasefire hopes improved sentiment. Sterling also regained ground after dipping below $1.32, climbing past recent highs with attention on near-term resistance and option expiries. Market participants continue to monitor technical levels closely, as movements remain sensitive to geopolitical developments. Overall, the region reflects cautious optimism, with currencies stabilizing but still vulnerable to sudden shifts depending on external factors.

American Markets

In North America, the dollar has softened broadly, while equity futures indicate a firmer opening. Oil prices, after briefly surging to new highs, have eased slightly but remain near elevated levels. The Canadian dollar strengthened modestly, with the US dollar retreating from recent highs. In Latin America, the Mexican peso gained as the dollar weakened, supported by technical signals suggesting further upside. Economic data releases, including US services activity and Canadian PMI figures, are unlikely to fully capture current conditions, as most reflect pre-conflict trends. Markets expect no immediate policy changes despite rising inflation concerns.