TD Securities reported early market moves linked to the Iran conflict, with broad but measured US Dollar buying. Gold was up about $150, 10-year US Treasury yields were about 2bps higher, and Brent reached $82 per barrel before falling to around $78.
The firm said the Dollar could gain support from safe-haven flows, with the Swiss franc noted as the only currency outperforming it at the time. It also pointed to the Norwegian krone and Canadian dollar as likely to do better than the euro and Australian dollar, and said USD/CAD could rise at the start.
TD Securities said gold could rise by as much as $200 per ounce on the open, with silver also expected to rally. It added that TIPS breakevens could widen and the Treasury curve could bull steepen, with 10-year yields expected to fall as markets price in more Federal Reserve easing.
Next week’s focus includes the US non-farm payrolls report on Friday, with forecasts for unemployment to stay at 4.3% and payrolls to rise by 90,000 for February. Other releases include Retail Sales and the ISM surveys for manufacturing and services.
The story was corrected to remove an outdated quote about a 10–15 day deadline linked to Trump and Iran. It was produced using an AI tool and reviewed by an editor.
Given the renewed tensions in the Strait of Hormuz, we are seeing markets react with a flight to safety. Initial moves show broad but measured buying of the US Dollar, which should continue as it benefits from its safe-haven status. This dynamic is a repeat of what we observed during similar flare-ups back in 2025.
The immediate reaction will be driven by expectations of more Federal Reserve easing, as geopolitical risk clouds the economic outlook. In fact, overnight swaps are now pricing in a 55% chance of a rate cut by the May meeting, a sharp increase from just 30% last week. The 10-year Treasury yield has already dropped 12 basis points to 3.85% on these fears.
In the currency markets, the Swiss Franc is the only major currency outperforming the dollar. We expect commodity currencies like the Canadian dollar to hold up better than the Euro or the Australian Dollar, particularly as speculative long positions in the Euro were near 18-month highs, making it vulnerable to a sell-off. For derivative traders, this suggests considering options that favor USD strength against the EUR and AUD.
Gold has surged over $50 to $2,350 per ounce, acting as the primary geopolitical hedge. We saw a similar playbook during the onset of the Eastern European conflict in 2022, when gold rallied significantly in a short period. Brent crude oil also spiked to $91 a barrel, and while it has settled, the risk of a sustained supply shock is now being priced into energy derivatives.
This week, the market’s focus will be split between these geopolitical developments and Friday’s crucial Non-Farm Payrolls report. Current consensus expects a gain of around 160,000 jobs for February, with unemployment holding at 3.6%. A weak report would intensify calls for Fed rate cuts and could further boost safe-haven assets.
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