A coordinated risk-off wave swept global financial markets on Thursday after US President Donald Trump delivered a televised speech warning that the US would hit Iran 'extremely hard' over the next two to three weeks, with no clear timeline for ending the conflict. Trump also threatened Iran's electricity infrastructure and called for allies to reopen the Strait of Hormuz, which has been closed since February 28, fueling a sharp rally in crude oil prices and intensifying recession fears [1][2][4][5][6].
The US Dollar surged as a safe-haven asset, prevailing against major peers. USD/CAD bounced above 1.3910, approaching its year-to-date high of 1.3966, as risk aversion dominated and crude prices recovered previous losses [4]. USD/INR climbed to near 94.50, with the Indian Rupee pressured by a 6.5% rally in WTI oil above $100 and continued foreign investor outflows—FIIs sold Rs. 8,331.15 crore on the first day of FY 2026-27 and Rs. 1,22,539.89 crore in March [5]. The Reserve Bank of India announced measures to curb speculative activity, but these are seen as insufficient against persistent geopolitical risks [5].
The Pound Sterling weakened to near 1.3215 against the US Dollar, as Trump's comments dampened hopes for de-escalation and fueled inflationary concerns. The Bank of England's Governor Andrew Bailey cautioned that markets are 'getting ahead of themselves' by pricing in multiple rate hikes, with traders fully pricing a full percentage point of BoE tightening in 2026 for the first time, as the Iran conflict continues to fuel inflationary pressures [2].
Silver (XAG/USD) slumped to around $70.60, breaking below its 100-day EMA at $73.80 and confirming a bearish near-term outlook. Technicals show RSI at 40.97, with sellers retaining momentum and immediate support at $68.00, followed by $65.00. A break below $65.00 could expose $63.20, where oversold conditions may slow but not end the bearish phase [1].
The Australian Dollar was the weakest major currency, with AUD/USD down 0.7% to near 0.6870, and S&P 500 futures trading 1.25% lower, reflecting weak demand for riskier assets. The US Dollar Index (DXY) rose 0.5% to near 100.00, as safe-haven demand intensified [6]. DBS strategist Philip Wee noted that the USD's haven bid may pause unless US equities make fresh year lows, and Fed officials have adopted a wait-and-see approach regarding the Iranian conflict. The Atlanta Fed GDPNow model projects US growth at 1.95%, down from 3% a month ago, and Friday's US jobs data is awaited for further direction [3].
Macroeconomic data in the US showed resilience, with ADP Employment Change up 62K in March (vs. 40K expected), Retail Sales up 0.6% in February, and ISM Manufacturing PMI at a nearly four-year high of 52.7. In Canada, S&P Global Manufacturing PMI eased to 50 in March, indicating stalling business activity [4].
CONCLUSION
President Trump's threats of intensified military action against Iran have triggered a broad risk-off move, boosting the US Dollar, oil prices, and safe-haven demand while pressuring risk-sensitive assets and currencies. Market participants are bracing for further volatility, with upcoming US jobs data and central bank responses likely to shape the next phase. The persistent geopolitical uncertainty and surging oil prices are fueling inflationary concerns and recession risks across global markets.