The core event across all sources is Iran's review of a US peace proposal, reportedly a 'one-page memorandum' aimed at ending the conflict and reopening the Strait of Hormuz, with further discussions on Iran's nuclear program to follow later. Iran's foreign ministry confirmed it is considering the proposal, and is expected to respond to mediators on Thursday [1][2][5][6]. While optimism surrounds the potential deal, Iranian state-linked media and the Iranian Students' News Agency noted that the US proposal includes provisions Tehran has previously rejected, and no final agreement has been reached [1][4]. US President Donald Trump warned Iran would face bombing 'at a much higher level' if it refuses the deal, stating Operation Epic Fury 'will be at an end' if Iran 'agrees to give what has been agreed to' [1][4][6]. NBC News reported that Trump's reversal on plans to help ships through the Strait of Hormuz followed a Gulf ally suspending US military access to bases and airspace, forcing a pause in Project Freedom [6].
Market reactions have been pronounced. The US Dollar Index (DXY) hovered around 98.00 after nearly 0.5% losses, as safe-haven demand eased and expectations for a prolonged hawkish Federal Reserve outlook diminished due to optimism over the US-Iran agreement and a sharp drop in oil prices [1]. However, Chicago Fed President Austan Goolsbee cautioned that inflation has not moderated toward the Fed’s 2% target and has accelerated since the conflict began [1]. Asian equities surged, led by Japan's Nikkei 225, which jumped over 5.70% to a record high of around 62,915, driven by tech-focused Softbank shares surging over 16% for their best day since 2020 [2][6]. Other Asian indices also rallied: SHANGHAI up 0.25% to 4,170, Hong Kong up 1.55% to 26,625, KOSPI up 0.22% to 7,405, Taiex up 2.00% to 41,970, while India's Nifty50 edged down 0.02% to 24,325 [2].
Oil markets responded with volatility. WTI crude consolidated below $93.00, down nearly 0.65% for the day, after a steep decline on Wednesday triggered by optimism over the US-Iran deal [4][6]. The downside for oil was cushioned by reassessment of the deal's likelihood and a broadly weaker US Dollar, which tends to benefit USD-denominated commodities [4]. Initial market reaction to upbeat US ADP employment data was short-lived amid diminishing odds for a Fed rate hike in 2026 [4].
Currency markets reflected improved risk sentiment. The AUD/USD pair retained a bullish bias near 0.7250, its highest since June 2022, supported by the Reserve Bank of Australia's hawkish outlook and optimism over the US-Iran deal, as well as receding bets for a US Fed rate hike [3]. The AUD/JPY cross strengthened above 113.00, with technicals showing a constructive bullish bias, though upside may be limited by intervention fears following suspected actions by Japanese authorities to strengthen the JPY [5]. Japan’s top FX official, Atsushi Mimura, stated he will closely monitor FX markets but declined to comment on intervention [2][5].
Forward-looking statements from analysts and officials highlight cautious optimism. Pepperstone strategist Michael Brown noted, 'We remain on the path towards de-escalation, and towards an end to the conflict,' suggesting risk appetite should remain underpinned as long as the direction remains optimistic [2]. However, the lack of a final agreement and unresolved US demands regarding Iran's nuclear program and port access temper expectations [1][4][6].
CONCLUSION
Iran's review of the US peace proposal has sparked optimism across global markets, leading to rallies in equities, a retreat in oil and the US Dollar, and bullish moves in risk-sensitive currencies. While market sentiment is positive, caution remains as no final agreement has been reached and key issues are unresolved. The event has had a high market impact, with investors closely watching for further developments.