Ahead of key central bank meetings this week and with rising tensions in the Middle East, US stock futures edged higher while the dollar index slipped. Following US strikes on Iranian oil facilities on Kharg Island, Brent crude prices surged to $106.50 before stabilizing around $105. Gold fluctuated below $5,000.

US job openings, according to the BLS report, rose to 6.95 million in January from 6.55 million in December, while layoffs declined. However, hiring did not increase significantly, indicating continued signs of weakness in the labor market. The ratio of job openings to unemployed workers remained at 0.9, reinforcing the Federal Reserve’s view that the labor market is not currently generating strong inflationary pressure.

As the Bank of England keeps interest rates unchanged this week, analysts believe the oil price shock from the Iran war has hit a cooling economy, unlike in 2022. With unemployment rising to a five-year high and demand weakening, policymakers face a historic dilemma: tackling inflation or preventing a recession. The experience of 2011 suggests the central bank may refrain from raising rates to avoid deepening the crisis. Markets are now pricing in a rate increase to 4% by December, rather than a cut.

Major New Zealand banks have warned that the Iran war will push the country's inflation to 3.6% in the second quarter, exceeding the central bank's 1-3% target range. As a result, investors are now pricing in a possible interest rate hike as early as May. This comes just weeks after the central bank had forecast inflation at 2.3% for the end of the year.