Market participants are squarely focused on Friday’s nonfarm payroll data, which is expected to offer critical insights into the Federal Reserve’s next monetary policy move. With heightened uncertainty surrounding the size of the upcoming rate cut, labor market data has taken center stage in shaping the Fed’s trajectory, especially as the central bank weighs persistent inflationary pressures against signs of economic cooling.
Oil prices climbed as investors closely monitored geopolitical developments in the Middle East, particularly Israel’s anticipated response to Iran’s recent missile attack. U.S. President Joe Biden has reportedly urged restraint, advising Israel to avoid immediate strikes on Iran’s nuclear facilities, amid escalating regional tensions. The standoff has injected fresh volatility into global markets, pushing oil higher and intensifying risk-off sentiment.
The U.S. dollar index strengthened for a fourth consecutive day, driven by rising U.S. Treasury yields as investors sought safe-haven assets. The benchmark 10-year Treasury yield edged up by one basis point to 3.79% during Asian trading hours, after surging five basis points in New York. Geopolitical uncertainty has reinforced demand for U.S. government bonds, amplifying the flight to quality in a market already jittery over the potential fallout from Middle East instability.
As markets await clearer signals from both the Federal Reserve and global geopolitical developments, the intersection of monetary policy and geopolitical risk will continue to drive asset prices and investor sentiment in the days ahead.