Markets began Monday in a cautious mood as traders monitored the Middle East conflict. The US calendar includes the ISM Services PMI for March.<\/p>\n
Donald Trump set a deadline of 20:00 EST on Tuesday for Iran to open the Strait of Hormuz, and threatened strikes on infrastructure such as power plants and bridges. Iran warned of a \u201cmuch more devastating\u201d response if the US continued.<\/p>\n
Axios reported, citing sources familiar with talks, that the US, Iran and regional mediators were pushing for a 45-day ceasefire. US stock index futures were mixed in early European trade, while the USD Index held in a tight range above 100.00 after gains on Thursday and Friday.<\/p>\n
Crude oil eased, with WTI near $103 after rising more than 10% last Thursday. US labour data showed Nonfarm Payrolls increased by 178K in March, after February\u2019s 133K fall (revised from -92K), beating the 60K forecast.<\/p>\n
The Unemployment Rate slipped to 4.3% from 4.4%, and participation fell to 61.9% from 62%. Annual Average Hourly Earnings growth slowed to 3.5% from 3.8%.<\/p>\n
EUR\/USD held above 1.1500, with April Sentix Investors Confidence due. GBP\/USD traded above 1.3200 after a two-day fall.<\/p>\n
Gold dropped more than 1.5% before Easter, then held above $4,650. USD\/JPY stayed above 159.50.<\/p>\n
Given the tension in the Middle East, we see a significant rise in implied volatility, especially with a deadline for the Strait of Hormuz set for Tuesday. This is not a time for simple directional bets, but rather for strategies that profit from sharp price swings. Options traders should consider buying straddles or strangles on assets most sensitive to the conflict.<\/p>\n
The crude oil market is the most direct way to trade this situation, as the Strait of Hormuz is a critical chokepoint through which about 21% of global petroleum liquids pass daily. We saw WTI prices jump over 10% last week, and any escalation could easily push them toward the $120-$130 range seen during similar geopolitical crises, such as the initial phase of the Ukraine conflict in 2022. Conversely, a ceasefire agreement could trigger a rapid sell-off, making options that benefit from a large move in either direction particularly attractive.<\/p>\n
For equity traders, hedging against a downturn is prudent. Buying put options on major indices like the S&P 500 offers downside protection. We are also looking at call options on the VIX, as the index could surge from its current levels toward the 30-40 range if military action occurs, a pattern we have observed in nearly every major conflict over the past decade.<\/p>\n
The US Dollar is benefiting from its safe-haven status, a trend reinforced by last Friday’s strong Nonfarm Payrolls report which showed a gain of 178,000 jobs. At the same time, gold is holding firm above $4,650, acting as a classic hedge against both conflict and potential inflation. We expect long positions in both the dollar and gold, likely through futures or options, to be favored in the coming days.<\/p>\n
That strong jobs report, however, came with softer wage growth and a lower participation rate, which may complicate the Federal Reserve’s next move. While the headline number argues for a hawkish stance, the underlying details suggest some weakness is creeping into the labor market. This adds another layer of uncertainty for traders to navigate once the immediate geopolitical risks subside.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Markets cautious as traders eye Middle East tensions, Hormuz deadline, ceasefire talks; oil eases, dollar steady.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-46622","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46622","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=46622"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46622\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=46622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=46622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=46622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}