Good morning, afternoon or evening to all ForexLive traders and welcome to the start of the new FX week.
The USD, and yen, are up a little from late Friday levels on the back of the awful attacks in Israel over the weekend:
Another Middle East item from the weekend:
As is usual for a Monday morning, market liquidity is very thin until it improves as more Asian centres come online ... prices are liable to swing around, so take care out there.
Indicative rates:
- EUR/USD 1.0565
- USD/JPY 149.09
- GBP/USD 1.2204
- USD/CHF 0.9093
- USD/CAD 1.3664
- AUD/USD 0.6366
- NZD/USD 0.5971
Turmoil in the Middle East can, and does, have various impacts on global financial markets, including on the U.S. dollar. There are several reasons that such turmoil can see an immediate bid emerge for the USD:
The US dollar is often viewed as a "safe-haven" currency. This may be expressed as a "flight to safety", or a "flight to liquidity". There is no more liquid financial market in the world than US sovereign debt (US Treasuries). During times of geopolitical tension or economic uncertainty, investors tend to move their money into assets perceived as more stable or safe, i.e USTs and the USD. With New Zealand markets opening before the rest of the word there is a market available in US dollars early on Monday. A similar 'flight' occurs into other perceived safe havens such as JPY and CHF (to a lesser extent).
Oil prices will tend to catch a bid too on Mid-East issues. There is no oil market (except CFDs and such privately offered markets) open at this time, but again with oil on global markets priced in USD there will be a bid for USDs ahead of oil opening for trade in the hours ahead.
There are other impacts but the above are the short-term, immediate reasons for a rise in the USD.
There are some Middle East stock markets open on Sunday, these are lower.
Murderous attacks in Israel.
