Middle East tensions rose again, after reported exchanges between US and Iranian forces in the Strait of Hormuz. US Central Command said it hit Iranian facilities linked to attacks on warships, while Iran’s armed forces said US strikes hit an oil tanker, another vessel, and civilian areas.
Later Friday, the US releases April employment data, including Nonfarm Payrolls, the Unemployment Rate, and wage figures. Markets expect the Unemployment Rate to stay at 4.3% and project a 62K rise in NFP, alongside the University of Michigan’s preliminary May Consumer Sentiment Index.
Markets And Dollar In Focus
The US Dollar Index rose 0.25% on Thursday and was steady a little above 98.00 early Friday. US stock index futures were slightly higher after moderate losses on Thursday.
USD/CAD gained over 0.2% on Thursday and traded near 1.3650 in Europe, with Canadian jobs data due in the early US session. EUR/USD held near 1.1750, with several ECB speakers, including Christine Lagarde, scheduled later.
Reuters reported Japan intervened in early May after yen-buying on 30 April, and USD/JPY traded above 156.50. Gold was flat after topping $4,760, then rose about 0.8% near $4,730, while GBP/USD moved towards 1.3600.
We remember the tensions in the Strait of Hormuz from this time in 2025, which drove investors to a cautious stance. With new diplomatic talks scheduled with Iran next month, uncertainty is resurfacing, making call options on oil a prudent hedge against potential supply disruptions. This is especially true as recent data shows global oil inventories have fallen by nearly 2% in the last quarter.
Options Strategies And Risk Management
A year ago, we were anticipating a weak jobs report with only a 62K gain, but the recent April 2026 Nonfarm Payrolls report showed a robust 240,000 new jobs. This economic strength, contrasting with simmering geopolitical risks, suggests strategies like equity index collars to protect recent gains while remaining invested. The VIX, a key measure of market volatility, has ticked up to 15 from a low of 12 last month, showing a slight increase in market anxiety.
The situation with the Japanese Yen is a clear echo of the past, as we saw officials intervening around this time in 2025 when USD/JPY was above 156.50. With the pair now testing the 159.00 level, the Ministry of Finance has issued fresh warnings, making implied volatility spike. Buying put options on USD/JPY could be a valuable way to position for a sharp pullback similar to the one we saw in April 2024.
Last year’s extreme caution was reflected in gold prices touching an incredible $4,730 an ounce. While prices have since stabilized to around $2,450, central bank purchases hit a record high in the first quarter of 2026. This underlying support makes long-dated call spreads an attractive, lower-cost strategy to benefit from any renewed flight to safety.
