The dollar strengthened in early trading this morning, but not by a lot, as investors sought havens to start the week in a move to shield against mounting geopolitical risks following the US strikes on Iran. The US currency was stronger against the Euro, Swiss franc and most major foreign-exchange peers as markets opened for the week in Sydney. Newswires are forecasting ongoing weakness in stock prices and a rise in crude oil and gold prices as the bombing fuels demand for safety and heightens concerns about energy supply, leading to increased demand for safe-haven assets. However, we stress that on the FX front, moves have been relatively muted so far.
We think the headlines will be more extreme than the impact on the market.
- We can see the Greenback rotating around 98 and 102 over the coming weeks/months – a short-term headwind for gold.
MM remains bearish towards the $US medium/long term
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