Markets are closely monitoring developments in US-Iran peace negotiations, with investors awaiting further clarity on the next steps in the talks. US President Donald Trump stated that the Iran war could end very soon and described the ongoing discussions as 'productive and ongoing,' fueling optimism that a resolution may be near [1][2][3]. Reports circulated about a possible two-week extension to the ceasefire, but while several news outlets mentioned this, White House Press Secretary Karoline Leavitt denied the extension, emphasizing that talks are ongoing and productive [1][2]. The Strait of Hormuz remains a focal point, with Trump noting it is opening, while other reports indicate it is still effectively closed under a dual blockade, though Tehran may allow vessel passage if an agreement is reached [1][2].
This optimism has had a notable impact on financial markets. US stock index futures rose modestly on Thursday, with Dow Jones futures up 0.11% to near 48,720, S&P 500 futures up 0.20% to near 7,070, and Nasdaq 100 futures up 0.44% to near 26,480 [2]. The S&P 500 rose 0.8% and the Nasdaq 100 surged 1.59% on Wednesday, marking the strongest 11-day rally on record for the Nasdaq 100, driven by gains in technology stocks [2]. The Dow Jones, however, edged down by 0.15% [2]. Advances were led by technology, consumer discretionary, and communication services sectors, while materials, industrials, and utilities lagged [2].
Currency markets reflected a shift away from safe-haven assets. The US Dollar (USD) weakened broadly, with the USD/CAD pair falling nearly 1% for the week and hitting a three-week low at 1.3713 before a slight recovery [3]. The NZD/USD pair retained a bullish bias, trading above 0.5900 and reaching over a one-month high, supported by the upbeat market mood and positive Chinese macro data, though upside was capped by lingering geopolitical risks and a slight USD recovery [4]. The USD was the strongest against the Japanese Yen this week but lost ground against most other major currencies, including the Euro, Pound, Canadian Dollar, Australian Dollar, and New Zealand Dollar [1].
Additional market-moving news included President Trump's reiteration of his threat to remove Federal Reserve Chair Jerome Powell at the end of his term in May, raising concerns about central bank independence and undermining confidence in the USD as a reserve currency [3]. Powell's term as Fed chief expires on May 15, but he has indicated he will remain until a criminal investigation concludes, which could delay the confirmation of his successor [3].
Looking ahead, traders are focusing on upcoming US economic data, including the Initial Jobless Claims and Industrial Production reports, as well as corporate earnings from companies such as Netflix and PepsiCo [1][2][3]. Technical analysis for NZD/USD suggests continued bullish momentum, with key support and resistance levels identified, though upside momentum appears to be moderating [4].
CONCLUSION
Investor optimism over potential US-Iran peace talks has buoyed equity markets and pressured the US Dollar, with risk assets outperforming and safe-haven flows receding. However, ongoing geopolitical uncertainties and concerns about Federal Reserve leadership continue to inject caution into the market outlook. Traders are now watching for further developments in negotiations and key economic data releases for additional direction.