On March 3, Bank of Japan Deputy Governor Ryozo Himino did not provide any clear signals regarding a near-term interest rate hike, reinforcing market expectations that the central bank will maintain its current policy stance this month. According to a Bloomberg report, Himino, speaking to local business leaders in Wakayama City, western Japan, stated that the situation in the Middle East could impact Japan's economy and price trends, although it is currently difficult to predict the specific effects. The Bank of Japan will closely monitor developments. Himino's remarks indicate a very low likelihood of a rate hike at the BoJ's policy meeting on March 19th. This stance contrasts sharply with his position in January 2025, when he explicitly stated that the policy board would discuss raising interest rates at subsequent meetings, which the central bank ultimately did. Himino noted that his speech was prepared before the escalation of tensions over the weekend and therefore did not incorporate a reaction to the latest Middle East events. He emphasized that financial market volatility does not necessarily mean the central bank must keep policy unchanged, and its stance on raising rates has not shifted. He also pointed out that recent data show the effects of previous rate hikes remain limited so far, and financial conditions are still accommodative, suggesting there is room for borrowing costs to rise further.

Meanwhile, as the initial effects of the Middle East conflict emerge, traffic through the Strait of Hormuz has nearly halted. Production disruptions at a major Saudi Arabian refinery have upended energy markets, sending crude oil prices sharply higher. Brent crude futures closed up approximately 6.7%, settling near $78 per barrel, marking the largest single-day gain since June 2025. According to state media reports, oil prices extended their gains in after-hours trading after a spokesperson for Iran's Islamic Revolutionary Guard Corps stated the country would not allow oil to leave the region. Diesel futures, a key engine of the global economy, closed at their highest level in nearly three years. Helima Croft, Head of Global Commodity Strategy at RBC Capital Markets, stated in a report, "In a scenario of prolonged conflict, we expect oil prices to reach the $100 per barrel range. Energy is now clearly at the forefront of the conflict with Iran."

Data to be watched today include the Eurozone's February Harmonized Index of Consumer Prices (HICP) year-on-year, the U.S. January Durable Goods Orders monthly revision, and U.S. January Factory Orders monthly rate.

Gold / USD Gold edged higher yesterday, reaching a new five-week high, with the spot price currently trading around 5320. The primary driver behind the rise in the safe-haven metal was increased risk aversion fueled by escalating geopolitical tensions. Additionally, concerns over uncertainty regarding U.S. tariffs also provided some support for gold. However, profit-taking, diminishing expectations for Federal Reserve interest rate cuts, and rising U.S. Treasury yields limited the metal's upward momentum. Resistance is seen near the 5400 level today, while support is found around 5250.

USD / JPY The USD/JPY pair advanced yesterday, breaking through the 157.00 level to hit a fresh six-week high, with the current spot price trading around 157.40. The main factor supporting the pair's climb was safe-haven demand spurred by Middle East tensions. Furthermore, remarks from Bank of Japan officials, which solidified expectations for no policy change in March, also contributed to the pair's strength. Resistance is anticipated near 158.50 today, with support located around 156.50.

USD / CAD The USD/CAD pair moved higher yesterday, posting a modest daily gain, with the current spot price trading around 1.3680. Besides short-covering providing some support, the U.S. dollar index, bolstered by reduced Fed rate cut expectations and heightened risk aversion, climbed to a six-week high, which was the primary factor driving the pair's increase. Nonetheless, a significant surge in crude oil prices capped the pair's gains. Resistance is seen near the 1.3750 level today, while support rests around 1.3600.