US President Donald Trump announced a five-day postponement of planned strikes on Iranian energy infrastructure, citing ongoing discussions and 'very good and productive' talks, which he shared via his social network [1][2][3]. However, Iranian officials and media disputed the existence of any negotiations, maintaining a firm stance on the Strait of Hormuz and denying talks with Washington [1][2][3]. This conflicting information has kept markets volatile and on edge [2][3].
The delay in military action led to a sharp rebound in Gold (XAU/USD), which trimmed earlier losses but remained down nearly 3% after hitting $4,098, its lowest level since November. Gold prices rose toward $4,370, supported by a drop in US Treasury yields, with the 10-year T-note falling nearly four and a half basis points to 4.34% [1]. Oil prices retreated by about 10% to a one-week low, as risk appetite improved and Wall Street opened positively [1][2][3]. The US Dollar Index (DXY) recovered from daily lows of 98.88 to 99.32, still below its opening price, and the Greenback weakened against most major currencies except the Australian Dollar, which rebounded from multi-week lows to trade around 0.7018 [1][2][3].
The easing of safe-haven demand for the US Dollar encouraged flows into risk-sensitive currencies like the Australian Dollar (AUD), while USD/CHF traded lower around 0.7870, down 0.12% [2][3]. Despite the weaker US Dollar, the Swiss Franc (CHF) did not fully benefit, as the Swiss National Bank (SNB) remains opposed to excessive currency appreciation and stands ready to intervene [3]. The heat map of currency movements showed the US Dollar was strongest against the Australian Dollar, but weaker against most other majors [2][3].
Monetary policy expectations shifted in response to the energy-driven inflation concerns. The Federal Reserve (Fed) held rates steady in the 3.50%–3.75% range last week, and swaps markets have scaled back expectations for rate cuts this year, now anticipating a prolonged pause [1][2][3]. Chicago Fed President Austan Goolsbee expressed optimism for rate decreases by the end of 2026, contingent on inflation progress, while Fed Governor Stephen Miran stated it is premature to determine the impact of the energy price shock on inflation but continues to support rate reductions to bolster the labor market [1]. The Reserve Bank of Australia (RBA) raised its cash rate to 4.10% last week, following an earlier increase to 3.85% in February, with inflation data due later this week expected to reflect only part of the recent price pressures [2].
Looking ahead, preliminary S&P Global PMI data for March from Australia and the US, due Tuesday, will provide early insight into how the conflict is affecting the global economy [2]. Major central banks, including the Fed, BoJ, BoE, and ECB, have maintained hawkish holds amid heightened geopolitical tensions and energy price jumps [1][3].
CONCLUSION
Trump's postponement of Iran strikes has triggered a rebound in gold, a sharp drop in oil prices, and notable currency volatility, with the US Dollar weakening against most majors except the Australian Dollar. Market sentiment remains cautious due to conflicting signals from US and Iranian officials, and central banks are maintaining a hawkish stance amid persistent inflation risks. The situation continues to drive short-term market movements, with upcoming economic data expected to shed further light on the broader impact.