The US dollar is generally lower today alongside gold as the Middle East conflict hasn't expanded. However the scope of the retracement so far is small compared to the outsized moves on Friday.
The antipodeans are particularly strong today as S&P 500 futures rise 21 points, or 0.5%. That move has come despite a 2-8 bps rise in Treasury yields across the curve. NZD is the top performer after conservative parties won the weekend election.
One geopolitical trade that hasn't unwound is oil, which is up 15-cents. Some of the thinking that is keeping it bid is that the talk of a 'grand bargain' where Saudi Arabia recognizes Israel in exchange for US security guarantees has dissipated. That is the talk that helped to cap the rally at $95 two weeks ago.
The headline that everyone is fearful of right now is Israel starting a counter-offensive. That one is inevitable but the worry is that when it starts, someone else enters the fray and things begin to cascade.
