2023-10-15 15:49:00
Traders in the world’s financial markets are bracing themselves for volatile market fluctuations. Continuing conflict in the Middle East has increased demand for haven assets and forced investors to rethink the outlook for global interest rates.
In the foreign exchange market, attention will likely be focused on movements in the US dollar, Japanese yen, and Swiss franc, which are traditionally considered safe currencies. Risk-sensitive currencies such as the Australian dollar might come under selling pressure once more. Gold prices rebounded to $1,900 per ounce on the 13th, posting their biggest rally since March.
Market participants are also expected to focus on oil prices and the US Treasury market, which has seen wild price movements in the past week.
Israel has announced that it is preparing for a “large-scale ground operation” in the Palestinian territory of Gaza. Meanwhile, the United States has held informal talks with Iran in recent days and warned Iran not to escalate the fighting in Israel. Secretary of State Blinken is scheduled to return to Israel on the 16th to hold further discussions with senior Israeli officials.
According to Bloomberg Economics, further conflict in the Middle East might lead to a global recession. Investors are also concerned regarding the Federal Reserve’s interest rate hikes and whether Congress can avert a government shutdown.
Ed Alhusseini, global interest rate strategist at Columbia Threadneedle, said the deteriorating macro environment combined with rapid changes in interest rates “set the stage” for increased global volatility. While global investors are keeping an eye on whether the war between Israel and Hamas will spread to other regions, currency traders said they are now paying more attention to the U.S. Federal Reserve.
The Speaker’s seat remains vacant in the U.S. House of Representatives. The Republican Party nominated Representative Jordan, who is supported by former President Trump, as its candidate, but moderate members are concerned regarding his hard-line stance, and there is strong opposition within the party. The U.S. House of Representatives cannot decide on any proposals, including new aid to Israel, until a new speaker is chosen.
In any case, there is no doubt that the conflict in the Middle East is the biggest turbulent factor for investors.
“Everyone is nervous regarding how this will play out, but until there is a real concern regarding oil supply, markets will be watching with bated breath,” said Rabobank’s senior foreign exchange strategist. , said Jane Foley.
news-rsf-original-reference paywall">Original title:Global Markets Brace for More Volatility Amid Israel Conflict(excerpt)
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