The US attack on Iranian nuclear facilities over the weekend has kept investors on edge, propping up the safe-havens and triggering another move upwards in oil prices.
All eyes are now on the extent of the retaliation from Iran, whether that be through further missile and drone strikes on Israel or a blockade of the Strait of Hormuz.
If successful, the latter would be a significant development for markets, given the high importance of the route for global oil trade, around 20% of which passes through the Hormuz Strait.
We do note, however, that the moves seen in markets have been relatively contained so far today, with the US dollar and oil futures trading only modestly higher.
Investors appear to be clinging onto hopes of a de-escalation, and are perhaps just thankful that Iran’s military response has been limited and that the US attack on Iran seems likely to be a one off, rather than the start of a full-blown war.
At this stage, markets are in the dark as to where we go from here. Suffice to say, an escalation in the conflict would be greeted with another bout of risk aversion, as investors would price in rising geopolitical uncertainty, higher oil prices and possible supply-chain disruption. The US dollar would remain well placed in this environment.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
Recommended Content
Editors’ Picks
EUR/USD bounces back above 1.1600 despite market caution ahead of US PPI data
EUR/USD holds the bounce above 1.1600 in the European morning on Wednesday. The pair appreciates amid a modest US Dollar retreat, driven by traders’ caution ahead of the upcoming US Producer Price Index data due later in the day.
GBP/USD extends rebound above 1.3400 after hot UK inflation data
GBP/USD extends the rebound above 1.3400 in the early European session on Wednesday. The pair is helped by an upside surprise in the UK Consumer Price Index (CPI) data for June, which weighs on the BoE rate cut expectations and supports the Pound Sterling. The US PPI data is next in focus.
Gold price sticks to intraday gains amid softer risk tone, subdued USD price action
Gold price regains positive traction during the Asian session on Wednesday and has now reversed a major part of the previous day's slide to the $3,320 area. Investors remain on edge amid persistent uncertainty surrounding US President Donald Trump's trade tariffs.
Trump strikes deal to unblock crypto bills in House, GENIUS Act set for vote
US President Donald Trump steps in to revive momentum for crypto legislation in the US House of Representatives. On Wednesday, Trump announced that 11 of the 12 House representatives have agreed to support the GENIUS ACT bill.
China’s first-half growth remains on track, though activity data signals caution
China's second-quarter GDP beat forecasts again with a 5.2% year-on-year growth, driven by strong trade and industrial production. Yet sharper-than-expected slowdowns in fixed-asset investment and retail sales and falling property prices are a concern.
Best Brokers for EUR/USD Trading
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.