The U.S. military strikes on Iran's Kharg Island have intensified fears of a broader regional conflict, with Trump reportedly seeking urgent support from China, the EU, UK, and NATO to secure the Strait of Hormuz. The Strait of Hormuz, a critical global energy corridor, has seen ship traffic drop to zero amid escalating tensions. Meanwhile, China reported mixed economic data, with industrial output exceeding forecasts but housing prices continuing to decline. The PBOC set the USD/CNY reference rate slightly below expectations, signaling potential yuan stabilization efforts. Global equity funds experienced significant outflows, and Japan warned of decisive FX interventions to support the yen. The situation in the Strait of Hormuz is a key driver of oil price volatility, as any disruption to this vital shipping route could trigger sharp price spikes. Traders are closely monitoring geopolitical developments and potential military responses from the EU and NATO. The U.S. is also considering seizing Iran's oil depot on Kharg Island, which could further escalate tensions. For forex markets, the USD/CNY rate and broader U.S.-China dynamics remain critical, while oil prices are under pressure from both supply concerns and Trump's policy uncertainties. For MENA investors, the Hormuz crisis poses immediate risks to energy security and regional stability. Gulf markets are particularly vulnerable to oil price fluctuations and any spillover from U.S.-Iran tensions. Key assets to watch include Brent crude, USD/CNY, and regional equities. Central banks in Asia, including Japan and New Zealand, are also signaling potential policy shifts in response to U.S. tariffs and inflationary pressures. Traders should monitor diplomatic developments and military movements in the Gulf for short-term market direction.

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