Markets finished last week on a softer note after US-Iran peace talks collapsed and the Federal Reserve delivered a hawkish hold, driving the US dollar to its strongest weekly gain in a month. Heading into the new week, the situation has become considerably more complex, with Iran announcing it has once again closed the Strait of Hormuz and high-stakes negotiations resuming in Switzerland. Key data releases from Australia and Thursday’s US Core PCE Price Index are the main fundamental focus for the week.
Market Review & Outlook
Markets finished last week on a softer note after hopes of progress between the US and Iran faded when negotiators failed to meet. The US dollar was the standout performer of the week after the Federal Reserve delivered a hawkish hold, helping the greenback rally strongly against the major currencies, while geopolitical developments continued to drive sentiment across broader markets.
Heading into the new week, the situation has become considerably more complex. Iran announced over the weekend that it had once again closed the Strait of Hormuz, citing continued Israeli military strikes in Lebanon as a violation of the ceasefire — though the US disputed the claim, insisting the waterway remains open. The conflicting signals have been enough to rattle energy markets and revive fears over global oil supply disruptions. Israel’s ongoing military campaign in Lebanon shows no signs of abating, adding a further layer of instability to an already fragile regional picture.
High-stakes negotiations between the US and Iran opened in Switzerland over the weekend, led by Vice President JD Vance, and reports that talks are back on have provided some improvement in sentiment that could support a stronger market open on Monday. However, any optimism has been tempered by President Trump, who continued to issue threatening statements toward Tehran even as his own delegation sat across the table from Iranian officials — at one point suggesting the Iranian delegates may not be returning home and threatening to destroy the country. Iran’s delegation briefly walked out of the venue in response, underscoring just how fragile the diplomatic process remains. A peace deal is far from certain.
Against this backdrop, it is a relatively quiet economic calendar in the week ahead, and geopolitics is again likely to be a major influence on market direction. That said, several key data releases are expected to generate volatility across currency markets. Australian markets face an important week with inflation and employment figures due on consecutive days, while the main focus for many investors will be Thursday’s US Core PCE Price Index — the Federal Reserve’s preferred measure of inflation. With sentiment capable of shifting sharply on a single headline, traders should be prepared for elevated volatility throughout the week.
Key Events This Week
Key events to watch this week include: Australian CPI, Australian employment data, US Core PCE Price Index, Global Flash PMIs, and Core Tokyo CPI.
| Day | Event | Market Focus |
|---|---|---|
| Monday | PBoC Loan Prime Rate Decision | CNH |
| Monday | Canadian CPI | CAD |
| Tuesday | Global Flash PMIs (Manufacturing & Services) | Global |
| Wednesday | ★ Australian CPI Inflation | AUD |
| Thursday | Australian Employment Data | AUD |
| Thursday | ★ US Core PCE Price Index | USD |
| Thursday | US Final GDP | USD |
| Thursday | US Weekly Jobless Claims | USD |
| Friday | Core Tokyo CPI | JPY |
| Friday | UoM Consumer Sentiment (Revised) | USD |
Trading Outlook for the Week
Be ready for volatility. Trade the week ahead with focus.
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