Geopolitical risk dominated market narratives on Thursday as escalating US-Iran tensions drove oil prices sharply higher and weighed on equity sentiment, though better-than-expected US labor market data and upbeat manufacturing figures provided some counterbalance to concerns about a potential Middle East conflict.
Check out the forex news and economic updates you may have missed in the latest trading session!
Forex News Headlines & Data:
- Japan Machinery Orders for December 2025: 19.1% m/m (8.5% m/m forecast; -11.0% m/m previous); 16.8% y/y (2.0% y/y forecast; -6.4% y/y previous)
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Australia Employment Change for January 2026: 17.8k (25.0k forecast; 65.2k previous)
- Australia Unemployment Rate for January 2026: 4.1% (4.2% forecast; 4.1% previous)
- Swiss Industrial Production for December 31, 2025: -0.7% y/y (2.1% y/y forecast; 2.4% y/y previous)
- U.K. CBI Industrial Trends Orders for February 2026: -28.0 (-25.0 forecast; -30.0 previous)
- Canada Balance of Trade for December 2025: -1.31B (-2.4B forecast; -2.2B previous)
- Canada New Housing Price Index for January 2026: -0.4% m/m (-0.1% m/m forecast; -0.2% m/m previous)
- U.S. Initial Jobless Claims for February 14, 2026: 206.0k (229.0k forecast; 227.0k previous)
- U.S. Balance of Trade for December 2025: -70.3B (-58.0B forecast; -56.8B previous)
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Philadelphia Fed Manufacturing Index for February 2026: 16.3 (7.0 forecast; 12.6 previous)
- Philly Fed Employment for February 2026: -1.3 (9.7 previous)
- U.S. Pending Home Sales for January 2026: -0.8% m/m (6.5% m/m forecast; -9.3% m/m previous); -0.4% y/y (2.4% y/y forecast; -3.0% y/y previous)
- U.S. Leading Index for December 2025: -0.2% m/m (-0.4% m/m forecast; -0.3% m/m previous)
- Euro area Consumer Confidence Flash for February 2026: -12.2 (-11.7 forecast; -12.4 previous)
- President Trump said the US has ten to fifteen days at most to strike a deal with Iran over its nuclear program, stating “We’re either going to get a deal, or it’s going to be unfortunate for them,” while adding that his son-in-law Jared Kushner will serve as an “envoy of peace.”
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Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay – Chart Faster With TradingView
Thursday’s trading session was defined by sharply divergent asset class performance as escalating geopolitical tensions in the Middle East collided with resilient US economic data, creating a complex backdrop where traditional risk correlations struggled to hold.
WTI crude oil dominated as the session’s strongest performer, surging 2.87% to close at $66.60 per barrel. The rally accelerated through the US session following President Trump’s remarks aboard Air Force One that Iran had just 10 to 15 days to strike a deal over its nuclear program, warning the outcome would be “unfortunate for them” otherwise. The comments reinforced market concerns about potential military action given the massive US military buildup in the region, including two aircraft carriers and hundreds of fighter jets now positioned across the Middle East. The energy complex received additional support late in the US session from a larger-than-expected crude inventory drawdown of 9.01 million barrels reported by the EIA, suggesting tighter supply conditions.
Bitcoin posted the second-best performance, gaining 1.23% to trade around $67,117. The cryptocurrency rallied steadily from the Asian session, fell during London trade, then bounced through the US afternoon, and with no crypto specific drivers to point to, it appears US dollar behavior and risk sentiment were the primary drivers on the sesssion.
Gold advanced 0.48% to settle near $5,001 per ounce, hovering just below the psychologically significant $5,000 level. The precious metal’s relatively modest gain despite heightened geopolitical tensions and its positioning near record highs suggested some profit-taking may have tempered safe-haven demand.
US equities declined for the fourth consecutive session, with the S&P 500 falling 0.17% to close around 6,863. The index opened slightly higher during the Asian session and continued to weaken through London and US trade before stabilizing into the afternoon close. The selling pressure appeared to reflect both geopolitical risk aversion and concerns about technology sector valuations, though losses remained relatively contained given the magnitude of Middle East tensions. The decline came despite surprisingly strong economic data, including initial jobless claims dropping by the most since November to 206,000 and the Philadelphia Fed Manufacturing Index surging to 16.3 versus 7.0 expected, suggesting geopolitical concerns outweighed positive domestic fundamentals.
Treasury yields fell 0.24% to approximately 4.10% on the 10-year note. The bond market move likely correlated with safe-haven demand as investors positioned for potential escalation in the Middle East, though the magnitude of the yield decline remained modest relative to the geopolitical headlines. The drop in yields occurred even as US economic data pointed to labor market stabilization and manufacturing strength, reinforcing that flight-to-quality flows dominated rate expectations during Thursday’s session.
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FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Majors – Chart Faster With TradingView
The US dollar experienced choppy and volatile trading throughout Thursday, ultimately closing mixed against major currencies with an arguably neutral to net bullish lean on a daily basis, as geopolitical tensions in the Middle East competed with mixed regional economic data for directional control.
During the Asian session, the dollar traded mostly sideways and choppy with an arguably net bearish lean. Australian employment data showed a mixed picture, with the headline change of 17.8k missing the 25.0k forecast, though full-time employment surged 50.5k versus 10.0k expected while the unemployment rate held steady at 4.1%. The Australian dollar showed relative resilience despite the softer headline figure, likely supported by the strong full-time component. Japanese machinery orders data came in significantly stronger than expected at 19.1% month-over-month versus 8.5% forecast, though this appeared to generate limited sustained impact on the yen. The dollar’s choppy behavior during Asian hours suggested traders were positioning cautiously ahead of the day’s heavy US economic calendar and ongoing Middle East geopolitical developments.
After a slight dip following the London session open, the dollar rallied against major currencies heading into the US session. European data flow was relatively light, with UK CBI Industrial Trends Orders coming in at -28.0 versus -25.0 expected, slightly better than the prior -30.0 reading but still reflecting ongoing weakness in the UK manufacturing sector. Swiss trade balance data showed a surplus of 3.6B versus 3.3B forecast, while industrial production disappointed at -0.7% year-over-year versus 2.1% expected. The dollar’s rally into the US session open likely reflected pre-positioning ahead of the US initial jobless claims report and Philadelphia Fed Manufacturing Index, both of which had potential to move markets given recent volatility in US economic data.
During the US session, the dollar continued to see elevated volatility but was trading mostly sideways with a net bearish lean initially before recovering through the afternoon. The 8:30 am ET release of initial jobless claims showed a dramatic drop to 206,000 from 227,000 prior, well below the 229,000 forecast and marking the lowest level in several weeks. The sharp decline added to evidence of labor market stabilization following distortions from severe winter weather in late January. The Philadelphia Fed Manufacturing Index at the same time surprised dramatically to the upside, surging to 16.3 versus 7.0 expected and 12.6 prior, with the business conditions component soaring to 42.8 from 25.5. The strong manufacturing data contrasted with ongoing weakness in housing, as pending home sales fell 0.8% month-over-month versus a 6.5% gain forecast.
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Upcoming Potential Catalysts on the Economic Calendar
- New Zealand Balance of Trade for January 2026 at 9:45 pm GMT
- Australia Manufacturing & Services PMI Flash for February 2026 at 10:00 pm GMT
- Japan CPI Growth Rate for January 2026 at 11:30 pm GMT
- Euro area ECB President Lagarde Speech at 12:00 am GMT
- Japan Manufacturing & Services PMI Flash for February 2026 at 12:30 am GMT
- Germany PPI Growth Rate for January 2026 at 7:00 am GMT
- U.K. Retail Sales Growth Rate for January 2026 at 7:00 am GMT
- Euro area Manufacturing & Services PMI Flash for February 2026 at 9:00 am GMT
- U.K. Manufacturing & Services PMI Flash for February 2026 at 9:30 am GMT
- Canada PPI Growth Rate for January 2026 at 1:30 pm GMT
- Canada New Housing Price Index for January 2026 at 1:30 pm GMT
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U.S. Core PCE Price Index for December 2025 at 1:30 pm GMT
- U.S. Personal Income & Spending for December 2025 at 1:30 pm GMT
Friday’s calendar features a dense concentration of tier-1 data releases across multiple regions that could drive significant volatility in currency markets. The Japanese CPI report at 11:30 pm GMT Thursday evening will provide critical insight into inflation trends following the Bank of Japan’s recent policy adjustments, with any acceleration potentially reinforcing expectations for further yen strength. European focus centers on the flash PMI releases throughout the London session, with Germany’s manufacturing figures particularly crucial given ongoing concerns about industrial weakness in the euro area’s largest economy. UK retail sales data will test consumer resilience following recent weak economic activity readings.
The US session brings the Federal Reserve’s preferred inflation gauge with the Core PCE Price Index for December, though market impact may be limited given the reading covers a period affected by the government shutdown that concluded in mid-November. Personal income and spending data will provide additional context on consumer health heading into early 2026. Canadian retail sales and producer price data round out the North American calendar.
Markets remain highly sensitive to any developments on the US-Iran diplomatic front, with President Trump’s 10 to 15 day timeline for a deal creating a compressed window that could generate headline risk at any moment.
Stay frosty out there, forex friends!
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