Peace Agreement Drives Market Rally, Central Banks to Convene Tomorrow

Markets are finally receiving the resolution they have long anticipated. After months of conflict, Washington and Tehran announced a peace pact that would immediately end hostilities, paving the way for the reopening of the Strait of Hormuz and the gradual restoration of normal oil flows. Investors reacted swiftly, unwinding the war premium that had dominated trade for much of the past few months at an unprecedented pace.

The response was immediate and dramatic. Brent crude opened lower on the week’s market and fell below USD 83 as traders priced in fewer supply disruptions and reduced energy costs. Equities surged globally, with Japan’s Nikkei leaping 5% to hit a record high. European markets rallied broadly, and U.S. futures pointed to strong gains on Wall Street. Even before the agreement receives its formal signature in Switzerland on Friday, investors are treating peace as the baseline scenario.

Currency markets echo the shift. The dollar is the weakest major currency of the day, as defensive positioning is unwound. The Swiss franc and euro lead gains, while the Australian dollar benefits from improving risk sentiment. The yen is under pressure as investors rotate away from safety, and the Canadian dollar grapples with the sharp decline in oil prices. The focus has moved from geopolitical risk to economic normalization.

That shift, however, may be short‑lived. As the Middle East story fades, a wave of central‑bank meetings will take center stage. The Federal Reserve remains the undisputed main event next Wednesday, but the policy cycle begins in Asia with decisions from the Bank of Japan and the Reserve Bank of Australia. Market participants are already primed for a high‑stakes week of global rate decisions.

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