Geopolitical tensions surrounding the U.S.-Iran conflict and the Strait of Hormuz dominated Wednesday’s trading session, keeping oil prices elevated despite the IEA’s record-proposed release of strategic reserves and sending Treasury yields sharply higher as traders priced in renewed inflation risk.
U.S. equities churned but closed negative as rising energy costs and bond market pressure offset a broadly in-line February CPI report, while the U.S. dollar closed as one of the day’s best-performing major currencies, gaining against all counterparts except the Australian dollar.
Check out the forex news and economic updates you may have missed in the latest trading session!
Forex News Headlines & Data:
- RBA Deputy Governor Andrew Hauser’s hawkish podcast remarks from Tuesday triggered a wave of forecasts for a March 17 rate hike, with Westpac, NAB, Citi, Deutsche Bank, Bank of America, UBS, and Capital Economics now expecting a hike at or around the next meeting
- U.S. API Crude Oil Stock Change for March 6, 2026: -1.7M (5.6M previous)
- Japan PPI for February 2026: -0.1% m/m (0.2% m/m forecast; 0.2% m/m previous); 2.0% y/y (2.3% y/y forecast; 2.3% y/y previous)
- Germany CPI Growth Rate Final for February 2026: 0.2% m/m (0.2% m/m forecast; 0.1% m/m previous); 1.9% y/y (1.9% y/y forecast; 2.1% y/y previous)
- ECB’s Kazimir said a rate hike on Iran-related inflation may be closer than thought
- ECB’s Villeroy said not to expect a rate hike at the next week’s meeting
- U.S. MBA Mortgage Applications for March 6, 2026: 3.2% (11.0% previous)
- U.S. MBA 30-Year Mortgage Rate for March 6, 2026: 6.19% (6.09% previous)
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U.S. CPI Growth Rate for February 2026: 0.3% m/m (0.3% m/m forecast; 0.2% m/m previous); 2.4% y/y (2.4% y/y forecast; 2.4% y/y previous)
- U.S. Core CPI Rate for February 2026: 0.2% m/m (0.2% m/m forecast; 0.3% m/m previous); 2.5% y/y y/y (2.5% y/y forecast; 2.5% y/y previous)
- U.S. EIA Crude Oil Stocks Change for March 6, 2026: 3.82M (3.48M previous)
- U.S. Monthly Budget Statement for February 2026: -308.0B (-170.0B forecast; -95.0B previous)
- IEA recommended the largest-ever coordinated strategic oil reserve release of 400 million barrels, with member countries deciding whether to proceed; Germany confirmed the announcement but details remained to be finalized
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Broad Market Price Action:
Dollar Index, Gold, Oil, S&P 500, U.S. 10-yr Yield, Bitcoin Overlay – Chart Faster With TradingView
Wednesday’s session was defined by the collision of a broadly in-line U.S. inflation report and an intensifying geopolitical backdrop, with oil surging and Treasury yields grinding higher as traders weighed the inflation consequences of the ongoing U.S.-Iran conflict.
WTI crude oil was the session’s standout performer, closing up approximately 2.51% near $86.95 per barrel. The chart above showed dramatic volatility throughout the day, including sharp swings during the Asian session as news emerged of the U.S. military eliminating Iranian mine-laying vessels near the Strait of Hormuz and the IEA proposing its largest-ever strategic reserve release. Crude surged from around $83 in the Asian session to a high near $89 during London hours before pulling back and then climbing again in the U.S. session to settle near session highs. Despite the IEA’s 400 million barrel reserve release recommendation, markets remained skeptical it would be sufficient to offset risks to Hormuz shipping flows, helping keep crude prices supported.
The U.S. 10-year Treasury yield rose approximately 8 basis points to settle around 4.222%. The yield chart shows a steady grind higher from around 4.136% during the Asian and early London sessions, accelerating after the U.S. CPI release at 8:30 am ET and continuing to push higher into the afternoon. The move likely reflected concerns that energy-driven inflation from the conflict could complicate the Federal Reserve’s easing path, with the $39 billion 10-year auction also drawing below-average demand, producing a 0.7 basis point tail and a bid-to-cover ratio of 2.45 below the six-month average, reinforcing the theme that investors are demanding higher yields to absorb Treasury supply. Market pricing shifted to reflect only one Fed rate cut expected for the full year.
The S&P 500 finished down approximately 0.37% to close near 6,765. The index opened the session near 6,817, rallied briefly during the Asian session to around 6,817, and then sold off into the London session. A brief recovery attempt around the CPI release was short-lived, with the index dropping after the data before recovering somewhat and spending the U.S. afternoon churning in a narrow range around the 6,763-6,776 area. The NASDAQ posted a marginal gain supported by technology shares, while the Dow Jones and Russell 2000 declined, leaving the S&P caught in between with the broad market overlay chart reflecting its generally sideways to slightly negative trajectory across the day relative to oil and yields.
Gold settled down approximately 0.41% near $5,176 per ounce. The gold chart shows a steady drift lower through most of the session, with a brief but sharp spike lower to around $5,149 that appeared to coincide with the CPI release around 8:30 am ET, before recovering and settling into a relatively narrow range between $5,170 and $5,185 through the U.S. afternoon. The decline was somewhat notable given elevated geopolitical tensions that would typically support safe-haven demand, and may have reflected pressure from sharply higher Treasury yields and a firmer U.S. dollar competing for safe-haven flows.
Bitcoin closed up approximately 0.96% near $70,635. Bitcoin saw mostly choppy, sideways trade through most of the Asian and London sessions, briefly dipping to around $68,989 just ahead of the U.S. open, before surging strongly on the CPI release and pushing up to session highs near $71,358. Bitcoin then sold off from those highs and spent the U.S. afternoon consolidating in a range roughly between $70,000 and $70,800. The cryptocurrency’s sharp rally into the CPI print and subsequent fade suggested some traders initially interpreted the broadly in-line data as supportive of risk assets, though the move proved difficult to sustain given the broader risk-cautious environment.
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FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Majors – Chart Faster With TradingView
The U.S. dollar closed as one of the session’s best-performing major currencies on Wednesday, gaining against all counterparts except the Australian dollar, which was buoyed by a sharp repricing of RBA rate hike expectations. The overlay chart shows a clear directional shift from early Asian session weakness to a broadly sustained bid that developed through the London session and carried into the U.S. close.
During the Asian session, the dollar traded net lower against the major currencies. The overlay chart shows most USD pairs drifting lower from the 18:00 ET Tuesday open through the early hours of Wednesday, with the Australian dollar leading losses for USD as it plunged sharply, likely reflecting the strong repricing of RBA rate hike expectations following RBA Deputy Governor Hauser’s hawkish remarks from Tuesday. AUD/USD rallied aggressively throughout the Asian session, rising over 0.8% at its lows, while other pairs showed more modest and mixed directional movement during this period.
After the London session open, the dollar shifted to trade net higher against the major currencies. Most major currencies began a broadly sustained lower against the greenback from around the London open at 3:00 am ET, possibly reflecting geopolitical risk flows into the greenback as headlines around the Strait of Hormuz and the IEA strategic reserve decision dominated European hours. GBP and CAD also edged modestly lower, though their losses were more subdued relative to the yen and euro pairs. The Aussie continued to trade higher and remained the clear outlier on the chart throughout the London session, with the RBA rate hike narrative keeping Australian dollar demand firm.
After the U.S. session open, the dollar saw increased volatility and traded choppy until after the London close, when it leaned positive. The overlay chart clearly shows the volatility spike around the 8:30 am ET CPI release, with sharp two-way moves across most USD pairs immediately following the data. The CPI report came in broadly in line with expectations — headline at 2.4% y/y and core at 2.5% y/y — which appeared to generate an initial muted reaction before the market ultimately interpreted the combination of stable inflation and rising energy risks as dollar-supportive. USDJPY in particular saw a notable leg higher following the data, moving from around the 158.30 area to eventually close near 158.92, a gain of approximately 0.56% on the day. For the remainder of the U.S. afternoon, the dollar traded in choppy, low-volatility fashion, with most pairs consolidating near their post-CPI levels.
Upcoming Potential Catalysts on the Economic Calendar
- New Zealand Manufacturing Sales for December 31, 2025 at 9:45 pm GMT
- Japan BSI Large Manufacturing for March 31, 2026 at 11:50 pm GMT
- Australia Consumer Inflation Expectations for March 2026 at 12:00 am GMT
- U.K. RICS House Price Balance for February 2026 at 12:01 am GMT
- Bank of England Gov Bailey Speech at 9:30 am GMT
- Canada Wholesale Sales Final for January 2026 at 12:30 pm GMT
- Canada Balance of Trade for January 2026 at 12:30 pm GMT
- Canada Building Permits for January 2026 at 12:30 pm GMT
- U.S. Balance of Trade for January 2026 at 12:30 pm GMT
- U.S. Building Permits Prel for January 2026 at 12:30 pm GMT
- U.S. Initial Jobless Claims for March 7, 2026 at 12:30 pm GMT
- U.S. Housing Starts for January 2026 at 12:30 pm GMT
- U.S. Fed Bowman Speech at 3:00 pm GMT
Thursday’s calendar brings a dense slate of North American data at 12:30 pm GMT, including U.S. initial jobless claims, trade balance, housing starts, and building permits alongside their Canadian equivalents. The jobless claims figure will be closely watched for any signs of labor market softening that could shift the Fed’s calculus on the rate cut timeline, particularly following Wednesday’s CPI print that left the inflation picture broadly unchanged but did little to ease concerns about energy-driven upside risks ahead.
Australia’s consumer inflation expectations at 12:00 am GMT could add to the RBA rate hike narrative that drove Australian dollar strength on Wednesday, with markets already pricing a March 17 hike. BoE Governor Bailey’s speech at 9:30 am GMT will attract attention for any updated commentary on how the Bank views the inflationary impact of the Middle East conflict on the U.K. economy. Fed Governor Bowman’s speech at 3:00 pm GMT could also attract market attention for signals on how Fed officials are weighing the recent CPI data against the inflation risks posed by the ongoing geopolitical conflict.
Stay frosty out there, forex friends!
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