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Market Insight 13-03-2026

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  • Market Insight 13-03-2026

Market Update: Friday, 13 March 2026

The US Dollar has surged to a nearly four-month high as intensifying Middle East hostilities fuel global inflation fears. Market participants are pivotally focussed on a heavy slate of US economic data due later today, which will likely dictate the next move for interest rate expectations.

Geopolitical Crisis and Energy Markets

The conflict shows no signs of de-escalation, with rhetoric from both sides suggesting a prolonged period of maritime and economic disruption.

  • Strait of Hormuz: Iran’s new supreme leader, Mojtaba Khamenei, issued his first public statement declaring that the closure of the Strait of Hormuz will continue as a tool to pressure the “enemy.”
  • US Response: US Treasury Secretary Scott Bessent has announced that the US Navy will begin escorting oil tankers through the Strait when militarily possible to secure global energy flows.
  • Oil Prices: Crude oil prices climbed roughly 9% on Thursday. West Texas Intermediate (WTI) is currently consolidating in a narrow channel above $95 per barrel, remaining near the psychological $100 mark as supply disruption fears persist.
  • Gold: Spot gold prices remain on track for a second consecutive weekly gain, as investors seek safety amid the threat of a wider regional war.

Currency Market Overview

The US Dollar (USD) has breached the 100.00 level for the first time since late November, benefiting from its dual status as a safe-haven asset and a major energy exporter.

  • GBP/EUR: The cross is trading near 1.1570. Sterling is finding relative support against the Euro as the UK’s exposure to energy-led inflation further reduces the likelihood of near-term Bank of England rate cuts compared to the growth-sensitive Eurozone.
  • GBP/USD: Sterling is trading with a softer bias around 1.3260. Gains are being capped by the rampant US Dollar, despite UK GDP remaining unchanged in January—a result that was slightly better than the anticipated contraction.
  • EUR/USD: The pair is languishing near 1.1459. The Euro remains one of the weakest performers, burdened by the proximity of the conflict and data showing a 0.5% monthly contraction in Eurozone Industrial Production.
  • AUD/USD: The pair is trading near 0.7040. The Australian Dollar is struggling to gain traction as the broad “risk-off” mood in equity markets offsets the support typically provided by higher commodity prices.
  • USD/CAD: The pair is hovering around 1.3660. The Canadian Dollar is showing resilience against the strengthening Greenback, supported by the sustained elevation of crude oil prices.
  • USD/CHF: The pair is approaching recent highs near 0.7880. While geopolitical tensions usually favour the Swiss Franc, the US Dollar is outperforming as the Swiss National Bank (SNB) has ramped up its readiness to intervene to prevent excessive Franc appreciation.

Central Banks and Economic Outlook

  • Bank of England (BoE): Fading expectations for a rate cut continue to support the Pound on the crosses. The ONS reported that while GDP was flat in January, Manufacturing Production grew by 0.3%, suggesting some underlying resilience despite the energy shock.
  • European Central Bank (ECB): Policy outlooks remain depressed as Industrial Production figures for January disappointed. The ECB faces a deepening “stagflation” trap of rising energy costs and falling industrial output.
  • US Federal Reserve: Market expectations have shifted dramatically; traders are now pricing in only one 25-basis-point rate cut for the entirety of 2026, likely in December. High Treasury yields are continuing to provide a significant tailwind for the Dollar.

Final Summary

The final trading session of the week is dominated by a resurgent US Dollar as the “war-driven” surge in oil prices rekindles global inflation concerns. The aggressive stance from Iran regarding the Strait of Hormuz has forced a fundamental shift in central bank expectations, with markets now bracing for a “higher for longer” interest rate environment in the US. While the UK and Canada are seeing some currency support due to their energy profiles and hawkish central bank recalibrations, the Euro remains under significant pressure. All eyes are now on this afternoon’s US PCE inflation data and the second estimate of Q4 GDP, which will confirm whether the US economy remains strong enough to withstand the current geopolitical shock.