The U.S. dollar weakened on Friday and moved toward a second consecutive weekly loss as investors cautiously increased bets that the war between the United States and Iran may not spiral into a broader regional economic crisis, even as sporadic hostilities continued across the Gulf.

Currency markets stabilized after President Donald Trump insisted the ceasefire framework with Iran remained intact following renewed exchanges of fire and drone attacks involving Gulf targets, including the United Arab Emirates.

While tensions remain elevated, traders increasingly appear to believe both Washington and Tehran are trying to avoid a full collapse of diplomatic efforts, particularly amid reports that indirect negotiations are continuing ahead of a closely watched Trump-Xi summit scheduled for May 14-15.

The softer tone in currency markets marked a notable reversal from the panic-driven surge into the dollar seen immediately after the Iran war erupted on February 28 and Tehran effectively tightened control over the Strait of Hormuz, one of the world’s most strategically important oil chokepoints.

At the height of those fears, investors rushed into traditional safe-haven assets while aggressively selling currencies tied to oil-importing economies such as Japan and parts of Europe.

Now, analysts say markets are recalibrating.

The dollar index, which measures the U.S. currency against major peers, fell 0.28% to 97.96 on Friday and remained close to its weakest levels since before the war began. The index is on track for a weekly decline after already falling the previous week, signaling that the initial geopolitical premium built into the dollar may be fading.

Francesco Pesole, foreign-exchange strategist at ING, said investors are increasingly focusing on whether major powers, particularly China, can pressure both sides toward de-escalation.

“The hope for risk bulls is still that China is adding pressure on the U.S. to reach some kind of deal in the Gulf before the May Trump-Xi summit,” Pesole said.

Currency strategists say the market’s behavior highlights a broader shift in sentiment across global finance, where investors are starting to treat geopolitical flare-ups as temporary disruptions unless they trigger lasting damage to energy flows, corporate earnings, or economic growth.

That shift has also been visible in equities, where technology stocks and AI-related companies have continued rallying even as military tensions persisted in the Gulf.

Analysts noted that positioning in the dollar has largely normalized after the sharp defensive buildup seen during the early phase of the conflict. Oil prices, while still elevated historically, have also pulled back from recent highs above $125 per barrel, easing fears of an immediate global energy shock.

Still, markets remain fragile.

The ceasefire has been punctuated by repeated incidents, including Iranian strikes targeting Gulf states and clashes involving U.S. naval operations near the Strait of Hormuz.

Investors remain highly sensitive to any indication that shipping lanes could face renewed disruption. Currency traders warned that another major spike in oil prices could rapidly reverse the dollar’s decline by reigniting demand for safe-haven assets.

The euro rose 0.35% to $1.1765 and appeared poised for a modest weekly gain, supported partly by improving investor confidence that Europe may avoid the worst-case economic fallout from the Gulf conflict.

However, economists continue to warn that the eurozone remains vulnerable to higher imported energy costs if tensions escalate again. Attention also remained fixed on the Japanese yen, one of the currencies most exposed to energy-market volatility because Japan imports nearly all of its oil.

The yen traded near 156.78 per dollar after Japanese officials intensified warnings against speculative attacks on the currency. Tokyo has intervened repeatedly in foreign-exchange markets in recent months as surging oil prices and widening interest-rate differentials pushed the yen toward multi-decade lows.

Japanese authorities reiterated Thursday that they remain in close coordination with U.S. officials and face no restrictions on intervention frequency.

Derek Halpenny, head of research for global markets at MUFG, said renewed instability in Hormuz could again pressure the yen sharply.

“The reports of clashes between the U.S. and Iran in the Strait of Hormuz certainly raise the risk of a renewed jump in crude oil prices that scuppers Japan’s efforts to halt a move in dollar/yen through the 160-level,” he said.

The British pound also strengthened after Prime Minister Keir Starmer signaled he would remain in office despite heavy losses for Labour in local elections.

Sterling rose 0.40% against the dollar.

Meanwhile, commodity-linked currencies such as the Australian and New Zealand dollars advanced as investor appetite for risk improved modestly.

Beyond geopolitics, markets are also awaiting the latest U.S. non-farm payrolls report, which could shape expectations for Federal Reserve policy.

Analysts say only a sharply weaker-than-expected labor report would significantly alter the current market narrative. Volkmar Baur, forex analyst at Commerzbank, said current expectations suggest little immediate change to the Federal Reserve outlook.

The broader picture emerging in global markets is one of uneasy stabilization. Investors are no longer pricing in an imminent collapse of the global economy from the Iran war, but neither are they fully convinced that the crisis has been contained. Instead, markets are increasingly trading on the assumption that diplomatic negotiations, energy volatility, and geopolitical shocks will continue to coexist for months.

Biopharmaceutical company Odyssey Therapeutics successfully priced its initial public offering at the top of its range, raising $279 million in a strong debut that highlights the returning appetite for high-quality immunology platforms in 2026.

The Boston-based company sold 15.5 million shares at $18 each on Thursday, above its marketed range of $16 to $18. The upsized offering reflects robust demand from institutional investors for Odyssey’s focused approach to treating autoimmune and inflammatory diseases.

This marks another notable success in what has become a meaningful revival of the U.S. biotech IPO market this year, buoyed by expectations of a more predictable and innovation-friendly regulatory environment under President Donald Trump and anticipated shifts at the U.S. Food and Drug Administration.

In recent weeks, several well-funded drug developers, including Seaport Therapeutics, Hemab Therapeutics, Alamar Biosciences, and weight-loss drug developer Kailera Therapeutics, have also gone public, signaling renewed access to public capital for promising biotech platforms.

Founded in 2021 by Dr. Gary D. Glick, Odyssey has rapidly established itself as one of the most heavily backed private biotech companies, raising approximately $726.5 million from more than 30 investors prior to its IPO. Glick, who serves as chairman and chief executive officer, brings significant credibility to the venture. He previously founded Scorpion Therapeutics, which was acquired by Eli Lilly in 2025 in a deal valued at up to $2.5 billion in cash, one of the largest takeouts in the targeted oncology space in recent memory.

Odyssey is developing novel therapies for autoimmune and inflammatory conditions, an area with substantial unmet medical need and strong commercial potential. Its lead candidate, OD-001, is currently in a mid-stage clinical trial for ulcerative colitis, one of the two primary forms of inflammatory bowel disease (IBD).

The company plans to use the IPO proceeds primarily to advance clinical development of OD-001 and support other general corporate purposes. IBD affects millions of patients worldwide and represents a multi-billion-dollar market, with significant room for new therapies that offer better efficacy, safety, or convenience than existing treatments.

Glick’s track record of building scientifically rigorous companies and successfully exiting them has clearly resonated with investors. Odyssey’s ability to attract substantial private capital and command a strong IPO valuation underscores confidence in both its science and leadership team.

J.P. Morgan, TD Cowen, and Cantor served as the lead underwriters for the offering. Odyssey is expected to begin trading on Nasdaq under the ticker symbol “ODTX” on Friday.

The strength of Odyssey’s debut adds to growing optimism that the biotech financing window is reopening after several challenging years. Improved sentiment around regulatory clarity, potential policy tailwinds for innovation, and strong performance by several recent IPOs have encouraged more companies to test the public markets.

Investors appear particularly interested in platforms with experienced founders, differentiated science, and assets already in clinical development. Odyssey fits this profile well, entering the market with a lead program in mid-stage trials and a seasoned management team.

However, the broader environment remains selective. Only companies with compelling data, strong balance sheets post-IPO, and clear paths to value inflection are likely to succeed. Odyssey’s substantial pre-IPO funding gives it a solid cash runway, reducing immediate financing risk and allowing management to focus on clinical execution.

The IPO also highlights continued investor appetite for immunology and inflammation plays. With growing understanding of disease pathways and advances in precision medicine, this sector has delivered several high-profile successes in recent years, attracting both specialist healthcare investors and generalist funds seeking growth opportunities.

Odyssey’s success in the ongoing Phase 2 trial of OD-001, combined with disciplined capital allocation, is expected to position the company for further upside. The IBD space remains competitive, but meaningful innovation continues to be rewarded. However, the offering values Odyssey at a significant premium, reflecting both excitement around its pipeline and confidence in Glick’s ability to deliver.

Oversea-Chinese Banking Corp delivered stronger-than-expected first-quarter earnings Friday, but the lender also sent one of the clearest warnings yet from a major Asian bank about the growing economic risks stemming from the Middle East conflict and its impact on energy markets.

Singapore’s second-largest bank reported net profit of S$1.97 billion for the January-to-March period, up 5% from S$1.88 billion a year earlier and ahead of analyst estimates of S$1.89 billion, according to LSEG data.

The more significant development may have been the bank’s decision to sharply increase precautionary buffers for potential future stress, even as executives emphasized that current credit quality remains stable. The bank emerged as the only major Singapore lender this earnings season to openly acknowledge the growing macroeconomic dangers tied to the conflict, while simultaneously increasing precautionary provisions despite no visible deterioration in its loan book.

That stance signals rising unease inside regional financial institutions that the impact of the war may spread far beyond oil markets and eventually weaken consumption, corporate activity, trade flows and credit quality across Asia’s export-driven economies.

OCBC reported net profit of S$1.97 billion for the January-to-March quarter, up 5% from S$1.88 billion a year earlier and ahead of analyst estimates of S$1.89 billion compiled by LSEG. The earnings beat was largely driven by record non-interest income and strong wealth-management performance, which helped offset pressure from falling interest margins as global monetary conditions began to ease.

But the bank’s decision to sharply increase allowances for non-impaired assets drew the strongest attention from investors and analysts.

OCBC set aside S$191 million in precautionary buffers during the quarter, compared with S$118 million a year earlier. The figure was especially striking because the bank had recorded a S$36 million write-back in the previous quarter, underscoring how rapidly its risk assessment has shifted.

CEO Tan Teck Long said the provisions were linked directly to concerns about the economic consequences of the Middle East war.

“We remain very concerned about what’s happening in the Middle East war because it’s a very direct impact in Southeast Asia in terms of energy supply and therefore the prices,” Tan told reporters.

“So to be prudent, although we don’t see credit quality issue in our portfolio… we have put in some general provisions for non-impaired loans, it’s really a third-order effect which we are being prudent about.”

The comments underline a growing concern among Asian lenders that the conflict could trigger a broader inflationary cycle at a time when many economies were expecting relief from high interest rates and slowing global demand.

Southeast Asia remains highly exposed to imported energy shocks. Countries across the region rely heavily on oil and gas imports for transportation, electricity generation, and industrial production. Sustained increases in crude prices could rapidly feed through to food costs, manufacturing expenses, and consumer inflation.

That risk is particularly sensitive now because many regional economies are already grappling with weaker exports, slowing Chinese demand, and softening manufacturing activity. A prolonged energy shock could force central banks across Asia to delay interest-rate cuts or even maintain tighter monetary conditions for longer than expected, adding further pressure to businesses and households.

OCBC executives stressed that direct exposure to the conflict remains limited for now. Chief Financial Officer Goh Chin Yee said direct Middle East-linked exposure, including petrochemical and refinery-related lending, represented less than 3% of total loans and around 1% of total assets.

However, she acknowledged the bank was increasingly focused on indirect fallout.

“The first-order impact is not material,” Goh said, adding that the lender was closely watching “second- and third-order effects” if the conflict drags on.

Those second-order risks include rising transportation costs, weakening consumer spending, margin pressure for manufacturers, disruptions to shipping routes, and increased volatility in commodity markets.

The cautious tone from OCBC is understood to mean there’s a wider shift taking place inside global banking. After years of focusing on inflation and aggressive central bank tightening, financial institutions are now confronting a more fragmented geopolitical environment where wars, sanctions, supply-chain disruptions, and energy security concerns are becoming persistent features of the global economy.

The quarter also highlighted the extent to which Singapore’s banking giants are increasingly relying on wealth management and fee-generating businesses to sustain earnings growth.

OCBC’s net interest margin fell to 1.76% from 2.04% a year earlier, while net interest income declined 5% to S$2.22 billion as lower rates began compressing lending profitability. That weakness was offset by a surge in non-interest income, which climbed 23% to a record S$1.61 billion. Fee income rose 24%, driven largely by wealth-management activity. Wealth fees jumped 34% to S$422 million, while net new money inflows reached S$5 billion during the quarter.

The results are a boost to Singapore’s growing role as one of Asia’s dominant private banking and wealth management centers, benefiting from capital inflows tied to rising affluence in Southeast Asia and continued global demand for politically stable financial hubs.

“Our wealth business is actually very diversified. We draw wealth from all over the world,” Tan said.

He added that the bank expects double-digit annual growth in wealth fees and assets under management going forward.

The earnings also come during a strategic transition period for OCBC. Earlier this week, the lender announced an agreement to acquire parts of HSBC’s wealth and premier banking operations in Indonesia, marking the first major transaction under Tan since he became chief executive in January.

Regional lenders increasingly see wealth management, cross-border banking, and treasury services as more resilient profit engines in an environment where loan growth is moderating and margins are narrowing.

OCBC’s results complete a relatively resilient earnings season for Singapore banks. Larger rival DBS Group recently posted stronger-than-expected quarterly profit, while United Overseas Bank also exceeded analyst forecasts despite softer overall earnings momentum.

Still, the tone from executives across the sector has become noticeably more cautious. The combination of geopolitical instability, energy volatility, slowing global trade, and uncertain monetary policy is increasingly forcing banks to prepare for a more difficult operating environment after years of unusually strong profitability.