* Trump says Iran will be hit hard for next 2 or 3 weeks

* US job cut announcements in Tech keep rising with AI adoption

* Crude, USD, Treasury yields jump on more escalation expected

* Wall Street trades off the lows ahead of Good Friday and NFP

FX: USD reversed its losses from Wednesday and headed up to the resistance zone around 100.50. President Trump’s address seemed to give the green light to more escalation in the Middle East, at least for two or three more weeks, versus any kind of wind-down. The fog of war and media battle will continue with competing sides stories proving it tough to follow unless you are very nimble and have a short-term biase. Otherwise, notably Fed Chair Powell was dovish leaning earlier in the week with no notion of early Fed hikes. Today’s NFP will give us a steer on how the labour market is faring in the run-up to the war.

EUR slid as risk sentiment again shifted. Interestingly, data suggests neutral speculative positioning on EUR/USD, as opposed to stretched net-longs earlier in March. That could boost bulls if any signs of de-escalation are evident. ECB rhetoric has been broadly hawkish with over 70bps of hikes priced in for 2026. The November low sits at 1.1468, with the mid-March low at 1.1410.

GBP underperformed with AUD and NZD with cable nearing the recent cycle low posted on Tuesday at 1.3159. A minor fib level of the November to January move resides at 1.3193 and below here is November low at 1.3010. This week has seen BoE Governor Bailey try to push back against recent rate hike bets. Many cautious economists think that a growing output gap and weak pricing power mean that there are limited chances of second-round effects from this energy supply shock. 

JPY dipped but by less than most of its peers as the major resumed its uptrend into recent highs around 160 and intervention territory. Rising Treasury yields hurt the yen while some are questioning if Washington will be happy with Japan selling up to $100bn, as it did in 2024 and presumably US Treasuries, to finance those FX sales. Big intervention like that typically makes the treasury sell-off worse and yields go higher.

US stocks: The S&P 500 added 0.11% to close at 6,583, the Nasdaq was 0.11% higher at 24,046 and the Dow Jones settled lower by 0.13% at 46,505. Real Estate led the gainers with Tech and Consumer Staples next best, while Consumer Discretionary and Healthcare led the laggards. Airlines inevitably struggled and Tesla dipped after disappointing Q1 deliveries. Private credit also grabbed the headlines after Blue Owl capped the amount investors can withdraw from two of its retail-focused funds. Peers Apollo and Ares slid.

Asian stocks: Futures are mixed. APAC stocks struggled as Trump’s speech disappointed everyone looking for a ceasefire. The ASX 200 pared gains as the risk mood soured with losses in tech, mining and materials. The Nikkei 225 fell below 53,000 on higher oil prices and broad selling. The Hang Seng and Shanghai Composite were muted with Hong Kong tech notably weaker.

Gold saw renewed weakness after four straight days of buying which hadn’t been seen since January. Higher yields and USD saw a textbook bearish outside range on the day with prices dipping below the 100-day SMA at $4631. That might open up the possibility of a reversal of its gains from the local March low around $4100.

Day Ahead – US Non-Farm Payrolls

The monthly US jobs report lands at a time when markets are trying to cope with the Middle East war and elevated energy prices. That has sparked inflation fears and a ramp up in Treasury yields, but the Fed’s dual mandate of price stability and also maximum employment means labour markets will grab the attention as cracks have continued to appear. With downward revisions to previous months, it turns out that over the past year the number of jobs added to the US economy has been almost negligible at just 156,000, versus just over 1 million jobs added in the year prior.

The headline forecast is for another solid gain in jobs of 65,000. This comes after a topsy-turvy couple of months with a -92,000 prior print and +130,000 headline in January, with swings partly distorted by bad weather and birth-death adjustments. Part of the rebound is expected to reflect the unwinding of a nurses’ strike in California and Hawaii. The jobless rate is forecast to stay unchanged at 4.4% and wage growth is predicted one-tenth lower at 0.3% m/m, and 3.7% y/y. We note this conflict started at the end of February which was between nonfarm reference periods this time and intensified as the month wore on. That means there could be a more negative impact upon hiring sentiment in the next report.

Chart of the Day – USD nears resistance zone

Fed funds futures have shifted sharply in response to developments in the Middle East. Pre-conflict, roughly two quarter point rate cuts were forecast in 2026. Now there is virtually nothing expected, with a few bps of hikes forecast last week.

A weak headline, rise in unemployment alongside softer wage growth would be a clearer sign that the jobs market is losing more momentum, so likely double trouble for the Fed’s dual mandate. On the other hand, if payrolls come in firm and wages stay hot, the Fed will have more reason to stay patient, though with oil prices still complicating the inflation outlook, a hike could get priced in. With markets closed over the data release, it may tough to discern any concrete market reaction with Middle East events very much front and centre. The dollar was bid after the Trump speech and ongoing military action. The July 2025 top plus various other highs from late last year and last month mean 100.25/40 is a tough area to break through. Above here are May 2025 highs around 101.76/90.