US CENTCOM launches strikes in Iraq targeting Iran-backed groups
US Central Command: carried out precision strikes in Iraq targeting Iran-backed groups planning attacks on US forces and Saudi oil facilities.
The US military said that the Iranian Islamic Revolutionary Guard Corps (IRGC) forces launched multiple ballistic missiles from Iran at 5:45 p.m. ET today.
Additional takeaways
All Iranian missiles were effectively intercepted.
US forces stay alert and maintain high readiness.
IRGC fired multiple ballistic missiles from Iran at US troops in the Middle East.
However, the Iranian state TV reported that the military source denied that Iran was involved in projectiles fired from other nations at targets in Saudi Arabia.
Meanwhile, the IRGC said that “three oil tankers were 'struck and stopped' a few hours ago after ignoring warnings in the Strait of Hormuz.”
Saudi Arabia’s Defense Ministry confirmed that strikes were carried out against Iran-backed group targets in Iraq.
Further details
Strikes coordinated with US Central Command.
Strikes were retaliation for drone attacks on oil facilities.
No desire for escalation but will react to any aggression.
Market reaction
Amid risks of fresh escalation in the Middle East, WTI – the US Oil benchmark – builds on the rebound from two-week lows near $77, currently up 4% at $81.60.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
