Crude realities: energy, geopolitics and the jobs report

Yesterday's currency recap

The USD Spot Index climbed to a session high, rising 0.5%, as WTI Crude Oil extended gains and pushed above $78 per barrel, the highest level since January 2025. In US data, weekly jobless claims came in at 213k for the week ending Feb 28, slightly below the 215k expected, suggesting the US job market remains relatively resilient.

Energy markets initially pulled back and broader risk sentiment improved amid reports that Iran was prepared to eliminate its uranium stockpile in earlier talks with the United States if it received “something good in return” — a narrative that markets interpreted as potentially diplomatic. However, Iran’s foreign ministry denied those claims about the negotiation process, calling various reports false and misleading, underscoring the ongoing ambiguity around nuclear diplomacy and geopolitical risk.

On the policy side, traders lifted rate hike expectations for the European Central Bank, with markets now pricing roughly a 75% probability of a rate increase in 2026.

Today's GBP rates

Key data points

What we think

February’s US jobs report is expected to show tepid payroll growth, with markets only expecting 55k job additions. Much of the weakness is likely temporary, reflecting the Kaiser Permanente strike, early February weather, and payback from unusually strong January hiring, though high-frequency indicators like Homebase point to broadly soft hiring. January layoffs were the largest for that month since 2023, and earnings call analysis suggests many firms intend to keep headcount flat, signalling that underlying job demand may be fragile. Overall, the job market is cooling rather than deteriorating sharply.

For FX markets, the USD may see limited upside from the report, as temporary payroll weakness is largely priced in, while persistent oil strength is likely to prop up demand for USD.

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