U.S. producer price growth accelerated last month, in a fresh sign of the potential inflationary impact of an energy shock caused by the Iran war. 

The producer price index for final demand rose by 1.4% on a month-on-month basis in April, compared to expectations for an increase of 0.5%. The rate from March was also revised higher to 0.7%.

It was the largest such rise since March 2022, when the U.S. economy was hit by a burst of inflationary pressure as COVID-era lockdowns began to ease.

In the twelve months to April, PPI jumped by 6.0%, compared to forecasts of 4.9% and an upwardly-revised pace of 4.3% in March. 

Nearly 60% of the April uptick was attributed to a 1.2% advance in the index for final demand services, due mainly to a climb in margins for machinery and equipment wholesaling, the Labor Department said. The indices for truck transportation for freight also gained, as well as those for chemicals, fuels, lubricants, health and beauty.

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Prices for final demand goods moved up 2%, driven in large part by a 7.8% surge in the index’s energy price tracker. Gasoline costs, in particular, spiked by 15.6%, while prices for diesel fuel, jet fuel and industrial chemicals all rose.

Oil prices have skyrocketed since the Strait of Hormuz, a vital waterway off of Iran’s southern coast, was all but shuttered following the outbreak of the war in late February. 

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The global crude benchmark is now hovering well above $100 a barrel. This has, in turn, fueled worries that a wave of inflation could impact countries around the world.

Data earlier this week showed that consumer prices notched their biggest rise in three years in April, also sparked by higher gasoline costs. Analysts have been on the lookout for indications that the effect of soaring energy costs is bleeding into other sections of the economy as well. 

Against this backdrop, the amount of Federal Reserve rate hikes expected by the market in the coming months has increased, although the central bank is seen standing pat in the near term.

Gold prices fell on Tuesday as investors monitored a fragile ceasefire between the U.S. and Iran, while also awaiting a meeting between Donald Trump and Chinese President Xi Jinping later this week.

Spot gold slipped 0.8% to $4,699.16 an ounce by 05:56 ET (09:56 GMT), while U.S. gold futures fell 0.5% to $4,707.20 an ounce.

Among other precious metals, spot silver dropped 2.6% to $83.90/oz, while platinum slid 2.7% to $2,078.23/oz.

Trump said that Iran’s response to a U.S.-backed peace proposal was a “piece of garbage” and warned that the ceasefire risked collapsing after weeks of indirect negotiations. He described the truce as being on “massive life support,” adding to fears of renewed escalation in the Gulf region.

Iran, meanwhile, said its armed forces were prepared to respond decisively to any “act of aggression.” Iranian officials insisted that Tehran’s demands -- including sanctions relief, restoration of oil exports, and recognition of its sovereignty over the Strait of Hormuz -- were legitimate. 

Oil prices remained elevated on Tuesday on concerns over possible supply disruptions through the Strait of Hormuz, a key artery for global crude shipments.

Higher oil prices have capped gains in bullion, as investors worry that a sustained rise in energy costs could fuel inflation and prompt the Federal Reserve to keep interest rates elevated for longer. Higher interest rates tend to reduce the appeal of non-yielding assets such as gold.

At the same time, the U.S. dollar has firmed, with traders viewing the greenback as a relative safe haven during the broader geopolitical uncertainty. The American economy’s role as a major energy exporter could also help insulate the country from a broader energy shock, some analysts have suggested, further denting gold. A stronger dollar can make the yellow metal more expensive for overseas buyers.  

"Gold’s safe-haven appeal tends to perform best in a financial crisis or growth shock -- when real yields fall and the dollar weakens. A supply-driven energy shock does the opposite," analysts at ING said in a note.

Markets were also focused on Trump’s expected meeting with Xi in Beijing later this week, where discussions are expected to revolve around Iran, Taiwan, trade tensions, artificial intelligence and energy security.

Attention is also turning to upcoming U.S. inflation data, particularly the consumer price index report due on Tuesday, for clues on the impact of the Iran war and the path ahead for the Federal Reserve’s interest rate policy. 

Futures linked to the main U.S. stock averages tick lower, after President Donald Trump rebuffed an Iranian response to an American peace plan as "unacceptable." Oil prices increase following the latest setback to hopes for an immediate resolution to the war in the Middle East. Analysts eye an upcoming trip by Trump to China, and gear up for key inflation data later in the week.

1. Futures slip

U.S. stock futures pointed lower on Monday, as investors assessed the potential for a permanent detente in the Iran war and kept tabs on runaway enthusiasm around artificial intelligence.

By 03:36 ET (07:36 GMT), the Dow futures contract had fallen by 79 points, or 0.2%, S&P 500 futures had slipped by 8 points, or 0.1%, and Nasdaq 100 futures had dropped by 25 points, or 0.1%.

The benchmark S&P 500 and tech-heavy Nasdaq Composite both notched fresh record highs, extending a recent strong run into a sixth consecutive week.

Largely underpinning the gains have been expectations that the Trump administration is searching for a path to conclude a more than two-month war against Iran that has greatly disrupted global flows and threatened the stability of the global economy. At the same time, traders have continued to eye massive ongoing spending by big-name tech companies on the building out of data centers to support AI.

"For stocks stateside, the bull case is simply one that’s too robust to fight right now, as geopolitical optimism combines with stellar earnings growth, and a return of euphoria around the AI theme," said Michael Brown, Senior Research Strategist at Pepperstone, in a note.

"Unless and until any of those factors shift, the path of least resistance should continue to lead higher, with dips remaining relatively shallow for now, and likely being used as buying opportunities by most."

2. Trump rejects Iran counteroffer

According to Iranian state TV, Tehran issued a response to a U.S. plan to end their more than two-month old conflict, focusing on concluding the fighting on all fronts and demanding compensation for war damage.

Iran also stressed that it controlled the Strait of Hormuz, a vital shipping lane off the country’s southern coast through which roughly a fifth of the world’s oil flows. The strait has been all but shuttered during the conflict, and is now blockaded by both the U.S. and Iran.

Writing on social media within hours after Iran appeared to make its counteroffer, Trump said: "I don’t like it — TOTALLY UNACCEPTABLE." No further details were provided.

The U.S. has proposed bringing the war to a swift end, followed by more detailed negotiations on key issues, especially Iran’s nuclear ambitions.

3. Oil rises

Oil prices, which have soared well above pre-war levels and fueled worries over an inflationary spike in countries around the world, marched higher.

Brent crude futures, the global oil benchmark, were last higher by 3.4% at $104.69 a barrel.

"One would expect the market to become increasingly fatigued by the deluge of headlines and the back-and-forth. However, oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf," ING analysts said in a note.

4. Trump to head to China from May 13-15

Still, the strategists suggested that Trump’s upcoming trip to China, a major buyer of Iranian oil, could be positive for peace efforts.

Trump will visit China for a summit with President Xi Jinping between May 13 and 15, Chinese state media reported on Monday.

It will be the first major trip to Beijing by a U.S. leader in nearly a decade, and is aimed at mending strained ties between the world’s largest economies.

Along with the Iran war, Trump and Xi are expected to discuss disputes over trade tariffs and Taiwan. The two are also likely to extend a trade truce signed in October, media reports said.

5. U.S. CPI ahead this week

Looking ahead this week, the U.S. consumer price index is due to highlight a slate of key economic data points.

Set to be released on Tuesday, the figures for April could provide a glimpse into the impact of the Iran war on U.S. inflationary pressures. In March, CPI accelerated, driven mostly by a sharp spike in gasoline-pump prices.

In April, headline consumer prices are seen increasing by 3.7% on an annualized basis, up from 3.3% previously. But, month-on-month, the number is tipped to slow to 0.6% from 0.9%.

So-called "core" CPI, which strips out volatile items like food and fuel, is anticipated to edge up slightly to 0.3% month-on-month. Analysts have been on the lookout for signs that the jump in crude prices will eventually feed into the costs of a range of goods beyond gasoline.

The U.S. dollar traded modestly lower during the European session on Friday as investors weighed renewed hostilities between Washington and Tehran against lingering hopes for a broader Middle East peace agreement.

The greenback weakened ahead of the closely watched U.S. jobs report, while markets also assessed the potential impact of higher oil prices and rising geopolitical tensions on the Federal Reserve’s policy path.

The US Dollar Index fell 0.3% in European trade, as of 11:50 GMT. 

"While the USD has softened, no bearish signal has been triggered, as skew has failed to follow spot and up/down volatility measures point to broadly neutral positioning," BofA strategists wrote in a note.

US-Iran Hormuz tensions escalate; Trump says ceasefire intact

Safe-haven demand returned after U.S. and Iranian forces exchanged fire near the Strait of Hormuz on Thursday, raising concerns over a renewed escalation in the region.

Iran accused the U.S. of targeting vessels entering the Strait of Hormuz and striking coastal areas near Qeshm Island, while Washington said it acted in self-defence after Iranian drones, missiles, and small boats targeted three U.S. Navy destroyers transiting the strategic waterway.

Despite the flare-up, President Donald Trump said the ceasefire remained in effect and described the confrontation as limited, while Iran said conditions had returned to normal.

Markets interpreted the comments as a sign that both sides were still seeking to avoid a broader regional conflict.

"With markets awaiting signs of progress on a potential US–Iran deal and the US nonfarm payrolls (NFP) release due later today, some consolidation in Asian FX is possible," MUFG analysts said in a note.

Traders await US jobs data for Fed clues

In Asia, the Japanese yen’s USD/JPY pair was down 0.1% on the day. The Indian rupee’s USD/INR was largely unchanged, while the Singapore dollar’s USDSGD ticked up 0.1%. The Australian dollar’s AUD/USD pair rose 0.2%, while NZD/USD jumped 0.3%.

In Europe, both the EUR/USD and GBP/USD traded 0.4% higher.

Gold prices rose for the third consecutive session on Thursday, touching a two-week high, as hopes for a U.S.-Iran peace agreement eased some inflation concerns, while a weaker dollar also aided demand.

Spot gold rose 0.9% $4,734.28 an ounce by 06:18 ET (10:18 GMT). Gold futures for June advanced 1.0% to $4,742.90 an ounce.

The yellow metal climbed more than 3% on Wednesday -- its biggest daily gain since late March -- as oil prices tumbled sharply on expectations that tensions in the Middle East could ease.

"The market is now pausing as traders wait for further clarity on the diplomatic track between the U.S. and Iran, with Tehran reviewing a new proposal that could outline a path toward reopening the Strait of Hormuz," said Neil Welsh, Head of Metals at Britannia Global Markets, in a note.

U.S.-Iran peace deal prospects in focus

Iran is reportedly reviewing a fresh U.S. proposal to end their more than two-month old war, even as President Donald Trump has maintained a threat to once again launch attacks should a deal fail to materialize.

Washington and Tehran have reportedly been working with mediators on a one-page, 14-point framework to restart talks over a lasting peace deal. The discussions are anticipated to kick off next week in Pakistan, according to the Wall Street Journal.

The paper added that a monthlong process would then look to resolve disputes over Iran’s nuclear ambitions and relief from sanctions, although key disagreements remain over areas like nuclear enrichment and inspections.

Trump suggested in remarks at the White House on Wednesday afternoon that the U.S. had "won" the war and that talks with Tehran had been "very good" over the last 24 hours.

According to CNN, Iran is anticipated to give mediators their response to the U.S. proposal by Thursday.

Oil prices fell after tumbling in the previous session, although crude remains well above pre-war levels. An energy shock sparked by the closure of the Strait of Hormuz, a vital waterway off Iran’s southern coast for a fifth of the world’s oil, has, in turn, fueled worries over a spike in inflationary pressures around the world. Expectations have subsequently grown that central banks -- especially the Federal Reserve -- could react by raising interest rates, a trend which may not bode well for non-yielding assets like gold.

"The potential easing in energy prices gives the Fed more room to cut rates, which is positive for gold," ING analysts said in a note.

But the prospect of lower energy prices helped reduce some fears of prolonged inflation, dragging down U.S. Treasury yields and boosting the appeal of bullion. 

Meanwhile, a softer U.S. dollar has also burnished gold, making it less expensive for overseas buyers. The greenback has become a relative safe-haven during the Iran conflict, thanks partially to the view among many traders that the American economy, as a major energy exporter, may be broadly immune to higher oil prices. Signs of detente, as a result,  have hit the dollar and led investors back into risk assets.

Markets are now awaiting Friday’s U.S. non-farm payrolls report for further clues on the Fed’s interest-rate path. While recent comments from Fed officials have highlighted concerns that the Middle East conflict could fuel inflation and disrupt supply chains, employment -- the other central pillar of the Fed’s mandate -- has remained broadly resilient.

President Donald Trump has suggested that the Strait of Hormuz will be "OPEN TO ALL" should Iran agree to U.S. demands, as hopes have grown that a deal to end the Middle East conflict may be edging closer.

In a social media post, Trump said that the U.S. assault on Iran, which Washington began with Israel in late February, "will be at an end" if Tehran "agrees to give what has been agreed to."

Trump did not elaborate further on what promises Iran had made, but threatened to resume bombardments "at a much higher level and intensity than it was before" should a deal fall through. He has claimed that "great progress" has been made in reaching an accord.

But the president told the New York Post that it was "too soon" to start thinking about possible in-person discussions with Iran.

Meanwhile, an Axios report said the White House believes that it is nearing a deal with Iran on a one-page memorandum of understanding to end the war, adding that the document would lay out a framework for more detailed nuclear negotiations.

Washington expects Tehran to respond on several major points within the next 48 hours, the report said. While nothing has yet to be agreed, this was the closest both sides have come to concluding the conflict since the outbreak of the fighting in late February, Axios said.

A potential deal would see Iran commit to a moratorium on nuclear enrichment, while the U.S. would agree to remove sanctions and release billions of dollars in currently frozen Iranian funds. Restrictions on the Strait of Hormuz would also be lifted to once again allow transit through the chokepoint, Axios reported.

An Iranian foreign ministry spokesperson said they were "evaluating" Washington’s proposal, CNBC reported. Pakistan, which has served as a mediator between the U.S. and Iran, also confirmed that both sides are closing in on an agreement, Reuters added.

Iran has indicated that it will only accept a "fair and comprehensive agreement" in talks with the U.S. to conclude the war, Tehran’s foreign minister said. Speaking in China following a meeting with Beijing’s top diplomat, Iranian Foreign Minister Abbas Araghchi added: "We will do our best to protect our legitimate rights and interests in the negotiations."

Notably, Beijing is a key buyer of Iranian oil, and media reports have suggested that China could be looking to persuade Tehran not to escalate tensions with the U.S. ahead of a meeting between Chinese leader Xi Jinping and Trump next week.

Oil prices retreated on Wednesday, with Brent crude futures, the global oil benchmark, last oscillating around $100 a barrel. Still, the Brent contract is well above pre-war levels of roughly $70 a barrel. Global financial markets rallied and U.S. stock futures rose as well.

Trump pauses "Project Freedom"

Earlier, Iran’s paramilitary Revolutionary Guards Navy reportedly said that safe and stable transit of the Strait of Hormuz will be possible. Citing Iranian state media, Reuters reported that the comment came after what the Revolutionary Guards described as the end of "threats from aggressors."

Trump announced on Tuesday that so-called "Project Freedom," a U.S. push to unblock the Strait of Hormuz by using military force to guide ships through the narrow the waterway, was being halted "for a short period of time."

The drive, which came into effect earlier this week, was soon followed by a fresh bout of attacks in the strait and the Gulf region, including on sites in the United Arab Emirates. Trump said that the change had come at the request of Pakistan and other countries.

The Strait of Hormuz, a major conduit for a fifth of the world’s oil, remains effectively closed off to tanker traffic, as it has for weeks. Both the U.S. and Iran have set up blockades.

An energy shock caused by continued disruptions to shipping activity in the strait has contributed to fears over a spike in inflation around the world and a slowdown in global growth.

The U.S. dollar tread water on Tuesday as investors assessed a flare-up in tensions in the Iran war, while the yen was muted after possible Japanese government intervention helped spur a jump in the currency last week.

By 06:44 ET (10:44 GMT), the U.S. dollar index, which tracks the greenback against a rival currency peers, had inched up by 0.1% to 98.48.

Meanwhile, the euro was mostly unchanged at $1.1689, while the British pound had ticked up by 0.1% to $1.3543.

Writing in a note to clients, analysts at ING said investors will be focused today on data showing April services sector activity and "whether selling price expectations are picking up." Should that be the case, the Federal Reserve may be dragged more towards the price stability side of its mandate, which would imply a tilt to a more restrictive policy stance.

The other pillar of the Fed’s mandate, employment, will step into the spotlight later this week when fresh monthly labor market figures are set to be released.

Hormuz tensions intensify

Hovering in the background were ongoing developments in the Middle East. Traders were noting indications that a U.S. operation to escort some ships through the strait may be loosening Iran’s stranglehold over the area.

In particular, a statement from shipping giant Maersk said a U.S.-flagged vehicle carrier operated by one of its subsidiaries had exited the Gulf via the waterway with the assistance of American military support.

But it was far from clear whether the U.S. effort was leading to a sustained reopening of the strait, a conduit for roughly a fifth of the world’s oil and liquefied natural gas which has been effectively shuttered during the more than two-month old Iran war.

U.S. and Iranian forces launched fresh attacks in the Gulf on Monday as both sides sought to assert control over the strategic waterway.

The attacks rattled an already shaky ceasefire and heightened fears of prolonged energy supply disruptions which have driven up oil prices and sparked worries over an inflationary spike. Tensions ratcheted up further after Iranian strikes reportedly targeted infrastructure in the United Arab Emirates, including an oil terminal in the port city of Fujairah.

Investors have turned to the U.S. dollar as a safe haven throughout the conflict, enticed in part by the view that the American economy -- as a major energy exporter -- was relatively immune to an Iran-linked energy shock.

"Unless there are clear signs of moves towards sustainable peace in the Gulf – and there is some focus that President Trump wants a deal before his trip to China on 14/15 May – we suspect high oil prices can keep short-dated U.S. rates and the dollar bid," the ING analysts said.

Eyes on the yen

Beyond the war, the Japanese yen last stood at 157.73 per U.S. dollar, not straying too far from its strongest level against the greenback in two months.

Last week, the yen spiked versus the dollar by around 1.5%, its biggest weekly increase since February.

Market participants now widely believe that officials in Tokyo intervened in currency markets last Thursday, with the aim of keeping the dollar-yen pair under 160 this year, analysts have suggested.

According to sources cited by Reuters, Japanese authorities did partake in yen-buying activity for the first time in two years.

Reuters added that money market data from Friday suggested that Tokyo may have shelled out as much as 5.48 trillion yen ($35 billion) in yen purchases last week.

Elsewhere, the Australian dollar, a proxy for risk sentiment, inched down after the Reserve Bank of Australia lifted interest rates as anticipated for a third consecutive meeting. The RBA also hiked its inflation projections and downgraded its economic growth outlook.

 Oil prices jumped in premarket U.S. trade on Monday after Iranian media reported that two missiles had struck a U.S. warship in the Strait of Hormuz, heightening fears of further escalation in the region.

The move in oil price was later tempered after a senior U.S. official denied the claim, according to Axios journalist Barak Ravid.

Earlier today, oil prices were also pressured by the Organization of Petroleum Exporting Countries and allies voting to increase its production quotas, in the face of increasing supply disruptions due to the U.S.-Israel war on Iran. 

Elsewhere, Ukrainian drone attacks on a Russian port and other energy infrastructure also pushed up concerns over supply disruptions. 

Brent oil futures for July rose 3.3% to $111.79 a barrel by 06:47 ET (10:47 GMT), while West Texas Intermediate crude futures was up 2.9% to $104.87 a barrel. Brent crude rose to as much as $114.29 on the news before paring gains.

Trump says US to aid stranded ships in Hormuz

Trump said on Sunday the U.S. would begin an effort from Monday to guide ships stranded in the Strait of Hormuz, aimed at aiding neutral countries in the U.S.-Israel war on Iran. 

He provided few actual details on the plan, but said his representatives were “having very positive discussions” with Iran. 

Separately, U.S. Central Command said support would include destroyers, over 100 land and sea aircraft, and 15,000 service members. It was not immediately clear whether the plan would involve direct military action. 

Traffic through the Strait of Hormuz remained disrupted after Iran effectively blocked the waterway in late-February. The channel supplies about 20% of the world’s oil production. 

Iran has vowed to keep Hormuz closed until the U.S. lifts its naval blockade against the country. Washington has insisted that Iran first open the channel and agree to a nuclear deal, leaving both countries at an impasse. 

Ukraine attacks Russian port, tankers 

Concerns over oil supply disruptions extended beyond the Middle East, after Ukraine launched a wave of drone attacks on targets across Russia on Sunday.

Ukraine struck the Baltic Sea port of Primorsk, while also attacking a number of vessels and energy infrastructure in the area. 

Ukraine has repeatedly targeted Russian oil infrastructure as a means of cutting off Moscow’s revenue stream and limiting its war efforts. 

Elsewhere, the OPEC+ said on Sunday they will increase oil production by 188,000 barrels per day in June. This comes after the United Arab Emirates left the producer group on May 1. 

U.S. President Donald Trump is set to receive a briefing more potential military action in Iran on Thursday, Axios reported, citing two sources with knowledge of the matter.

The briefing indicates that Trump is seriously considering resuming major military operations against Iran to break a deadlock with Tehran over the past two weeks, the Axios reported late-Wednesday. 

U.S. Central Command leader Admiral Brad Cooper is set to brief Trump on potential options, which include plans for a wave of attacks on Iran -- likely including infrastructure targets -- to break the deadlock, the report said.

Such a move is likely to end an indefinite ceasefire between the U.S. and Iran, with attempts at peace talks having largely fallen flat in recent weeks. 

Plans for more strikes are intended to either further coax Iran towards a deal, or to strike a finishing blow before ending the war, the Axios said. 

The hope is for Iran to return to the negotiating table with more flexibility on its nuclear issues, the report said. This came after Iran presented a proposal to reopen the Strait of Hormuz and end the war, while shelving discussions on its nuclear plans. 

The proposal was received poorly by Trump, with Iran’s nuclear activities remaining a key point of contention. 

Other options that Trump will be briefed on include a special forces operation to secure Iran’s uranium stockpile, or to take over part of the Strait of Hormuz by force and reopen it for commercial shipping, the Axios report said. Both operations could include ground forces. 

The U.S. has largely maintained its naval blockade of Iran, with Trump having viewed the move a major source of pressure on Tehran to accept a deal.

But Tehran has largely called for an ending of the blockade before more peace talks can be held. The country has also effectively blocked the Strait of Hormuz for much of the roughly two months since the onset of the war. 

Brent crude futures, the global benchmark, briefly surged to their highest intraday level since the beginning of the conflict in late February following the Axios report, but later gave those gains. Stocks in Asia and Europe were volatile.

White House seeking international help to reopen Hormuz - WSJ 

The Trump administration is seeking to build a new international coalition to restore shipping through the Strait of Hormuz as traffic through the vital waterway remains stalled, the Wall Street Journal reported on Wednesday.

Citing an internal State Department cable, the report said U.S. diplomats have been instructed to press foreign governments to join a proposed “Maritime Freedom Construct,” aimed at enabling safe navigation and coordinating responses to disruptions.

The initiative would involve information-sharing, diplomatic coordination, and sanctions enforcement, according to the cable, and could include both diplomatic and military participation.

The effort comes as tensions with Iran continue to disrupt traffic, with Tehran accused of targeting vessels and the U.S. maintaining a sweeping blockade on ships linked to Iranian ports.

The Strait of Hormuz has become a central issue in stalled U.S.-Iran talks. The effective shuttering of a narrow chokepoint for a fifth of the world’s oil has raised concerns over global energy supplies and oil prices.

The Wall Street Journal said the push signals Washington’s desire to involve allies more directly, even as Trump has previously criticised partners, particularly in Europe, for not doing enough to secure the waterway.

The dollar steadied in Asian trade on Wednesday with focus squarely on a Federal Reserve meeting later in the day, while the Australian dollar weakened after consumer inflation data for March showed a slightly smaller than expected spike. 

Broader Asian currencies largely retreated as sentiment remained frayed in the face of little progress towards U.S.-Iran peace talks, while anticipation of the Fed meeting also spurred flows into the dollar. 

Regional trade was dulled by a market holiday in Japan, with the yen weakening slightly. 

Dollar steady as Fed decision looms 

The dollar index and dollar index futures steadied in Asian trade, retaining some of their recent gains.

The greenback remained upbeat before the conclusion of a two-day Fed meeting later in the day, where the central bank is widely expected to leave interest rates unchanged. 

Focus will be squarely on the Fed’s outlook for inflation and rates, especially following a series of hawkish signals from other central banks on the inflationary impact of the Iran war.

Wednesday’s meeting is also expected to be the last under Fed Chair Jerome Powell, whose term ends on May 15. A major hurdle for Fed Chair nominee Kevin Warsh was cleared last week after Republican Senator Thom Tillis reversed his opposition of Warsh’s appointment, paving the way for a Congressional vote. 

Australian dollar falls after March CPI reads slightly below expectations 

The Australian dollar’s AUD/USD pair fell 0.25% after consumer price index inflation data for March and the first quarter read a touch below expectations.

But the data still showed a sharp increase in inflation over the past month, driven chiefly by higher fuel costs stemming from the Iran war. 

Core inflation also read a touch below expectations, remained steady and above the Reserve Bank of Australia’s 2% to 3% annual target. 

While the data did not show inflation rising as much as markets had feared, it still pointed to more interest rate hikes by the RBA. The central bank hiked rates by a cumulative 50 basis points in 2026, and warned of more such moves in the face of a fuel-driven increase in inflation. 

ANZ analysts said that despite the softer-than-expected CPI print, they still expect another 25 bps hike by the RBA at its May meeting. 

Asia FX muted as Iran uncertainty, Hormuz disruptions persist 

Broader Asian currencies largely retreated on Wednesday, as risk appetite remained weak due to a continued impasse in the U.S.-Iran war. Reports showed U.S. President Donald Trump telling his aides to prepare for an extended blockade in the Strait of Hormuz– a move that points to little immediate relief for markets. 

A market holiday in Japan also kept regional trading volumes low. The yen’s USD/JPY pair rose slightly and remained close to the 160 yen level, even after the Bank of Japan held interest rates and struck a hawkish chord on Tuesday.

The Chinese yuan’s USD/CNY pair was flat, while the South Korean won’s USD/KRW pair rose 0.3%. Chinese purchasing managers index data for April is also due in the coming days. 

The Indian rupee’s USD/INR pair rose 0.3% and came closer to breaking above 95 rupees, although traders remained wary of any further intervention by the Reserve Bank. 

The Singapore dollar’s USD/SGD pair was flat, while the Taiwan dollar’s USD/TWD pair rose 0.1%.