The US dollar strengthened on Thursday after President Donald Trump warned that American forces would continue striking Iranian targets for the next two to three weeks.
The remarks did little to ease investor anxiety over a widening Middle East conflict.
Attention now turns to the March jobs report, where analysts expect a modest rise in employment but are watching wage data closely for signs of building inflationary pressure.
Trump’s address rattles markets
Trump’s national address offered mixed signals: he suggested the war would end soon, yet simultaneously warned of sustained military strikes against Iran.
The contradiction left traders unsatisfied.
“He said the war would soon be ending, but he also said that for the next two to three weeks, the US military will be hitting many targets in Iran,” Carol Kong, a currency strategist at Commonwealth Bank of Australia told Reuters.
“He failed to reassure markets. Markets are starting to realise that the war will probably escalate further before de-escalating.”
Kong warned the dollar could extend its gains against all major currencies and that the global economy faced a material slowdown.
“Energy supply risk is still a big concern,” she said.
Currency moves
The euro fell 0.33% to $1.1554 against the dollar, while the British pound slipped 0.32% to $1.3254.
The Australian dollar weakened 0.64% to $0.6887 and the New Zealand dollar dropped 0.59% to $0.5719, both reflecting their particular sensitivity to shifts in global trade conditions.
The Japanese yen retreated to 146 per dollar, slipping back below the psychologically significant 150 level that some market participants regard as a potential trigger for Japanese currency intervention.
Jobs data in focus
Economists polled by Reuters expect Friday’s non-farm payrolls report to show a gain of around 60,000 jobs, enough to roughly match growth in the working-age population but well below the pace needed to signal a tightening labour market.
Rodrigo Catril, a strategist at National Australia Bank, said the figures were unlikely to move markets significantly unless the reading surprised sharply in either direction.
“We don’t think the jobs data will be a market mover, but all eyes will be on the inflation reading,” Catril said.
“The devil is in the details — we will be focusing on the wage component and household expenditure data to get a better read on consumer behaviour.”
A stronger-than-expected print could lift the dollar further, while a sharp rise in wages would intensify concerns about inflation at a time when businesses are already struggling to contain pay growth.
Expectations of Federal Reserve rate cuts, largely abandoned in recent months as investors braced for sustained high interest rates, received another blow last month when inflation data came in hotter than forecast, a trend many analysts attribute partly to the oil price surge driven by the Iran conflict.
What to watch
Any ceasefire developments or resumption of tanker traffic through the Strait of Hormuz could ease pressure on oil prices and shift the Fed rate-cut calculus.
Friday’s payrolls release will remain highly sensitive to war-related news, and a sharp contraction in hiring would be the clearest signal yet that the conflict is beginning to weigh on the broader US economy.
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