On Thursday, markets experienced significant volatility following Iranian missile and drone strikes on Kuwait and a US air base, which initially drove WTI crude oil prices back toward $91 and caused the US dollar to surge [1]. However, an Axios report later confirmed that Washington and Tehran had tentatively agreed to a 60-day ceasefire extension, pending approval from former President Trump. This news triggered a sharp reversal: oil prices fell, the dollar collapsed, and equities surged to fresh record highs [1]. The rapid sequence of these events set a new benchmark for market activity in the coming week.
Over the weekend, geopolitical tensions escalated further as Israel launched its broadest ground incursion into Lebanon in 25 years, crossing the Litani River. In response, Hezbollah fired more than 300 projectiles at Israeli forces and northern Israel [1]. Iran has made it clear that any US-Iran peace deal must include an end to the Lebanon conflict, effectively linking the two negotiations [1]. A two-hour Situation Room meeting at the White House on Friday ended without any announcement, adding to the uncertainty and mixed signals regarding the prospects for a deal [1].
Looking ahead, the economic calendar is weighted toward the latter part of the week. Monday features the ISM Manufacturing PMI as the only major US data release before Wednesday, when ADP and ISM Services reports are due. The week culminates on Friday with the release of Non-Farm Payrolls (NFP), average hourly earnings, and the unemployment rate at 12:30pm GMT, alongside Canada's employment figures [1].
CONCLUSION
Markets reacted sharply to both the tentative US-Iran ceasefire extension and escalating Middle East tensions, with oil, currency, and equities all experiencing rapid reversals. The lack of clarity from US officials and the linkage of multiple geopolitical negotiations add to market uncertainty heading into a data-heavy week.