* Iran reviewing new US peace proposal as sources say sides close in on deal

* Crude falls over 7%, gold and silver jump as USD slides

* Wall Street notches more record highs with Tech leading

* AMD hit record high after earnings, Disney and Uber beat estimates

FX: USD sold off sharply in the morning session, to a low of 97.62 before paring losses. There were several reports that a peace deal was near after President trump paused Project Freedom, though details remained relatively thin. Iran was said to be evaluating the US proposal, with President Trump grandstanding and Iran saying US demands were ‘unrealistic’. Brent crude dropped over 12% at one point to $100 before rebounding. As we said, the Trump-Xi China meeting looms large with the Iranian Foreign Minister said to have visited Beijing in recent days. Positive risk sentiment also caused dollar selling, with a better emerging market environment (USD/CNY at year-to-date lows) typically dollar negative.

EUR underperformed most of its peers, but the major got close to 1.18 before pulling back. Eurozone economic data has surprised negatively on the downside for the last two months as higher energy prices have weighed. But a precautionary ECB hike is still likely in June and needed to support the single currency. Critical support levels include the 200-day SMA at 1.1675 and the 38.2% Fib retracement of the January to March pullback at 1.1667.

GBP was the worst performing major versus the dollar apart from CAD, ahead of today’s widely watched local elections. Gilt yields tumbled with the 10-year down from Tuesday’s multi-year top at 5.10%, to 4.93% as relief came from falling oil prices. But near-term risks centre around the elections with potential for some headline driven volatility but with little immediate implications for PM Starmer.

JPY strengthened sharply, with the major down to a six-week low at 155.02 before rebounding. There was much speculation about more intervention in Asian hours with local markets still closed until today and liquidity thin. The 200-day SMA sits below at 154.13. The MoF is battling against several factors in trying to push the major lower including high oil prices and Treasury yields.

US stocks: The S&P 500 added 1.46% to close at 7,365, the Nasdaq rose 2.08% to 28,599 and the Dow Jones settled up by 1.24% at 49,911. Record highs on repeat for the S&P 500 and Nasdaq as AI related stocks again lifted the indices. The chip SOX index jumped another 4% to more record highs and is up 162% in the past year. Industrials, Tech and Consumer Services led the gainers. Energy was inevitably by far the worst sector, and along with Utilities were the only sectors out of eleven in the red. Nvidia bounced over 5.7% after last week’s sell-off, the first one for four weeks. Alphabet made more record highs as it climbed close to $400. AMD joined the chipmaker rally as it surged over 18% on an earnings beat and stronger than expected guidance due to accelerating data centre growth and strong demand for GPUs. There were also positive updates from Disney and Uber with the latter boosted by consumer spending remaining strong. Investors liked the long-term vision from the new Disney boss, with the stock up 7.5%.

Asian Stocks: Futures are green. APAC stocks traded green after solid Stateside gains amid the positive risk mood. The ASX 200 rebounded and broke above long-term SMAs, helped by financials and industrials. The Kospi soared to new record highs as Samsung joined the $1 trillion market cap group. The Shanghai Composite and Hang Seng followed the regional upbeat tone as the former returned from holiday.

Gold jumped after recent consolidation, with the 100-day SMA and 50-day SMA above at $4,760 and $4,799. Softer Treasury yields and the dollar are a boon to bullion bugs who have recently had to contend with inflation worries offsetting safe haven demand. World Gold Council data showed central banks turned net sellers of gold in March with Turkey leading the way as part of efforts to support FX liquidity. On the flip side, China extended its buying streak to a seventeenth month.

Day Ahead – UK elections

Local elections normally take second fiddle to national elections which obviously result in a PM and nationwide governing party. But there is much focus on today’s voting for local councils, due to the pressure on the current incumbent, Keir Starmer. A very poor Labour result (losing more than 1,000 seats) could trigger a leadership challenge from the left, particularly if the campaign rhetoric points toward looser fiscal rules, (market-unfriendly) tax increases, or much higher public spending. In that scenario, the combination of higher gilt yields, reduced fiscal headroom and political instability could quickly become bad for sterling.

But the setup is not one-way. The market is already broadly bearish GBP, and a poor Labour result has been well flagged for some time. If the election outcome is bad but not hugely more than expected, and if there is no credible path to a major fiscal policy shift, the pound could actually strengthen further as event risk is cleared. Results of the elections won’t likely be known until later on Friday, and there are no real exit polls like in national elections.

Chart of the Day – Cable trying to move higher

The UK faces a negative stagflationary growth/inflation shock from higher energy prices, with multi-year highs in Gilt yields. But GBP has been surprisingly resilient since the start of the Middle East conflict, helped by a sharper repricing higher in interest rates than elsewhere, broadly decent risk sentiment, and low implied volatility. Chartwise, the latest gains have delivered a push towards the 61.8% Fib retracement of the year-to-date January high/March low pullback at 1.3597 and the RSI is once again moving upwards into bullish territory above 60. Bulls will look for the recovery to fully retrace and a push to the 2026 highs in the mid/upper-1.38, with the minor Fib level at 1.3701. The 100-day SMA sits below at 1.3471.