Cable is back above 1.2200 and has recouped all of Friday's decline. It's up 66 pips to 1.2205 and at the highs of the day.
Risks from the Middle East certainly aren't hurting equities with the S&P 500 up 1.2% but the US dollar is softening and Treasury yields are rising. Treasury Sec Yellen today the US can certainly afford a war on two fronts in a sign the administration won't be cutting any kind of spending soon.
The dollar is a laggard today and is trading at session lows against CAD, AUD and GBP at the moment.
Fears around a broader conflict in the Middle East remain but have toned down from earlier, despite Iranian Foreign Minister Hossein Amirabdollahian tweeting, after meeting counterparts in Turkey and elsewhere:
Underlined the need to immediately stop Zionist crimes and murder in Gaza and to dispatch humanitarian aid. I stressed that time is running out for political solutions; probable spread of war in other fronts is approaching unavoidable stage.
Interestingly, he rewrote the tweet after initially writing:
The time for political solutions is running out and the possible expansion of the war on other fronts is approaching the inevitable stage.
There is certainly some nuance there but officials from Iran have really be rattling the sabres over the past two days. Meanwhile, the US and even Russia appear to be coaxing all sides towards restraint.
Ultimately, something is coming from Israel, who is preparing a ground invasion to 'wipe out' Hamas. When that comes, all eyes will be on other parts of the Middle East to see if there are attacks on Israel.
