The tense situation in the Middle East, which has turned into a conflagration with the firing of an Iranian missile at Israel, has seen the dollar (followed by T-bonds and gold) regain its status as a safe-haven asset.
The ‘$-Index jumped +0.6% to 101.36, with the Euro dropping -0.75% to 1.1050 and the Pound -0.95% to 1.3245.
The Yen and Swiss Franc also acted as safe havens, with minimal declines of -0.1%, as did the Canadian Dollar.
A wave of risk-offs is setting in on Wall Street with the probable missile strike on Iran, synonymous with the possible extension of the conflict to the main supporters of these 2 countries (USA, then China and Russia).
The escalation needs to stop quickly: to pursue it would be so unreasonable and devastating that the markets don’t really believe in it: they’re content to take a few precautions, waiting for the ‘adults in the room’ to calm things down in the Middle East.
But what a deterioration in the situation in 24 hours!
Hundreds of Israeli tanks entered Lebanon on Monday evening at around 8 p.m. (an unprecedented offensive since 2006), for a “limited operation” in terms of perimeter and time…
A few hours later, Tsahal had already announced that the strikes would be intensified and that reciprocal fire was to be feared, that Hezbollah’s defensive lines in Lebanon were very solid and that dismantling them would be difficult…
Then Iran fired missiles…
And gold soared by +30 to $2.885/Oz, which given the context remains unspectacular.
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