Oil

Geopolitical risks intensified after military strikes on Iran by the US and Israeli triggered retaliatory attacks across the region. Our base case assumes that Brent price slips below US$70/barrel by mid-year. In a moderately severe scenario—with partial oil flows through the Strait of Hormuz resuming under military escort—Brent could stay near US$100/barrel through mid-year, before cooling toward a well-supplied 2026 equilibrium. In an acute scenario with a prolonged halt in oil shipment through the Strait, Brent could spike toward US$140/barrel and remain elevated through mid-year.

Precious Metals

Gold

Gold’s recovery after a short period of weakness recently, has coincided with a softer US Dollar (USD), improved risk appetite and renewed demand for hedges. Heightened geopolitical uncertainty and fresh US trade‑ and tariff‑related noises have kept policy uncertainty elevated, helping gold to stay supported.

The latest tensions in the Middle East have reinforced demand for hedges against geopolitical tail risk, especially as markets are already sensitive to global policy uncertainty. The magnitude and sustainability of gold’s rally will hinge on how events evolve. A prolonged Middle East conflict that disrupts oil supply and feds into global growth and inflation risks would likely sustain demand for safe-haven assets. Conversely, a swift de-escalation could temper near-term momentum and prompt some consolidation.

Our constructive outlook for gold remains intact. Structural demand continues to underpin the market—led by persistent central bank buying and wider investor participation. These factors help explain why dips still attract buyers and why gold has held firm even when broader risk sentiment steadies. Conversely, in clear risk-off episodes driven by geopolitical escalation, gold also benefits from safe-haven demand.

Key risks to monitor include a hawkish repricing of Fed expectations or a rapid easing of geopolitical tensions that reduces safe-haven demand.

Silver

A more subdued USD, improved risk appetite and following the bout of weakness in late January (which provided a breather for silver after hefty gains) helped the precious metal to regain its footing and head higher. At the same time, heightened geopolitical risks resulted in greater demand for safe havens, including gold. With silver’s beta much higher than gold, it is no surprise that silver posted stronger gains than gold.

Overall, we remain constructive on silver. Its dual identity as both a safe-haven and industrial metal means it remains exposed to crosscurrents. Any sharp USD rebound, hawkish Fed repricing or signs of a downturn in industrial activity would exert downward pressure, while continued support from industrial usage including solar PV deployment, grid investment, and broader electrification themes should underpin medium-term demand. As such, we continue to expect two-way volatility, but within a broader constructive framework.

Currency

US dollars (USD)

Middle East tensions and the risk of a broader conflict moved to the forefront in early March after military strikes on Iran by the US and Israeli triggered retaliatory attacks across the region. This caused oil prices to increase sharply. Higher crude prices and rising risk aversion should lend support to the US Dollar (USD). The US, now the world’s largest LNG exporter and a net energy exporter since 2019, benefits from high energy prices. Energy linked currencies such as the Canadian Dollar, Norwegian Krone and Malaysian ringgit may gain, although geopolitical driven risk aversion could limit the upside. Conversely, import dependent currencies like the Japanese Yen, Indian Rupee and Turkish lira may face growing pressure if oil remains elevated.

Despite recovering from the “Greenland shock” and if there is no prolonged blockade at the Strait of Hormuz, the USD still faces modest downside risks as US policy uncertainty remains an overhang. This underpins our unchanged EURUSD (Euro-USD) forecast of 1.23 at end‑2026—driven more by a softer USD than a stronger EUR. Even so, resilient US growth should limit the risk of a deeper USD sell‑off. A true USD turnaround would require a solid reacceleration in US growth, which remains absent for now. Early signs of labour‑market stabilisation could nevertheless set the stage for a USD rebound in 2027. Our base case remains intact: the AI‑disruption narrative, tariff uncertainty and geopolitical oil shocks are unlikely to derail improving US and global growth, especially with fiscal support strengthening into 2026. Better non‑US growth provides scope for USD weakness even if US activity holds up—particularly against cyclically sensitive currencies such as the Australian Dollar, New Zealand Dollar, South African Rand and Brazilian Real.

Japanese Yen (JPY)

A report suggesting PM Takaichi’s reservations about further BOJ hikes, plus two dovish BOJ board nominees, has weighed on sentiment towards the Japanese Yen (JPY). Even so, BOJ Governor Ueda has signalled his intention to continue raising rates in line with economic and inflation progress, keeping attention on the March or April BOJ meetings. Intervention risks would rise quickly if USDJPY moves back toward 160, especially amid higher oil prices. Stronger warnings from Tokyo—and potentially Washington—are possible ahead of the 19 March US‑Japan summit. We stay neutral on the JPY. We maintain that JPY will struggle to shift from a funding to an investment currency unless the BOJ turns more hawkish than our baseline of two hikes this year.

Chinese Yuan (CNY)

USDCNY (USD-Chinese Yuan) extended its decline for the month of February. The Renminbi’s (RMB’s) outperformance was not due to a single catalyst but likely due a range of factors including a less strong USD environment and perception that policymakers may allow for RMB strength (given little pushback). That said, we would pay close attention to the daily currency fix in coming sessions to assess if policymakers allow for a faster pace of RMB appreciation or if policymakers are signalling for a moderation in pace of RMB appreciation.

Singapore Dollar vs Malaysian Ringgit (SGDMYR cross)

SGDMYR (the exchange rate between the Singapore Dollar and the Malaysian Ringgit) has continued to trend lower from around the 3.17 levels since start of the year. This is less about SGD deterioration but more about a meaningful improvement in Malaysia’s macro and flow dynamics that supported the MYR’s outperformance. Malaysian policymakers also appear to view MYR appreciation favourably. Some of the reasons the MYR has strengthened more than the SGD lie partly in differing sensitivities and starting points. The MYR is more cyclical and has a higher beta, meaning it responds more sharply to shifts in global risk sentiment and the direction of the USD and RMB. It also benefits more directly from commodity price tailwinds and was trading at deeper undervaluation previously, allowing for a sharper rebound when sentiment and fundamentals improved over the past year. In contrast, the SGD tends to move in a more measured fashion given MAS’s exchange rate-based monetary policy. Whether the MYR continues to outperform will depend on whether supportive drivers such as a stable risk appetite, a steady RMB, and sustained inflows remain intact. If global conditions turn more cautious, then MYR’s higher beta profile could just as quickly work in the opposite direction.