 Risk aversion dominates global markets today as geopolitical tensions in the Middle East intensify, though the broader equity selloff has remained contained so far. The trigger came early Friday when Israel launched a series of airstrikes deep into Iranian territory, targeting key military and nuclear infrastructure. In response, Iran retaliated with a wave of drone attacks aimed at Israel—estimated at around 100 drones. The development marked a sharp escalation in hostilities that took markets by surprise. While the US has so far distanced itself from the conflict, analysts have warned that any Iranian attack on American bases could pull Washington into the war, an outcome that would significantly raise the stakes for global markets. In currency markets, risk-sensitive assets are bearing the brunt of the shift in sentiment. Aussie and Kiwi have fallen to the bottom of the weekly performance board, weighed down by geopolitical fear and, in the Kiwi's case, a sharp deterioration in domestic manufacturing activity too. Dollar has managed to rebound modestly today, but remains the third worst-performing major for the week. Earlier inflation data, both CPI and PPI, came in softer than expected, reinforcing expectations for a Fed rate cut in September and limiting the Dollar’s momentum. Swiss Franc stands out as the strongest performer for the week, benefiting from traditional safe-haven demand amid heightened geopolitical uncertainty. Euro has also held firm, underpinned by a steady flow of ECB commentary indicating that the easing cycle is nearing its end. Loonie ranks third, supported by surging oil prices. Yen and Sterling are trading in the middle of the pack. The Yen, despite an early jump, has given back gains as safe-haven flows rotate toward the Franc..... |
