Collinson FX: June 18: Markets unsettled by Israeli attacks on Iran
by Collinson FX 19 Jun 2025 07:08 NZST
19 June 2025
NZ Nationals - RS Feva - Murrays Bay - May 11-12, 2025 © Justin Mitchell
www.justinmitchell.co.nz - Instagram: @jl_mitchell_
Collinson FX: June 18: Markets tumble on Iran strikes
Markets tumbled again overnight, with the Israeli war on Iran, totally pre-occupying markets. The war rages on, with devastating air attacks launched and received, from both sides.
US equities tumbled, once again, while the safety of the US Dollar was sought. The EUR crashed back below 1.1500, while the GBP fell to 1.3430. US Retail Sales sharply contracted in May, servicing as a perfect excuse to the Fed, to cut rates.
Markets are expected the Fed to hold rates, but the recent visit to the White House by Fed Chairman Powell and extreme public pressure, may surprise many.The Bank of Japan surprised no one, leaving rates unchanged, but indicating bond purchases will be tapered. This was in line with expectations and did little to move markets.
The surge in the reserve smashed the commodity currencies, with the AUD plunging back below 0.6500, while the NZD looks to lose 0.6000. All eyes remain on the Middle East, although the Fed looms large.
Collinson FX: June 17: Confidence returns following Sell-off
Confidence returned to markets, when they opened Monday following the big sell-off Friday, triggered by the Israel/Iran attacks.
The new front opened by Israel in the Middle East, was sudden, massive and not unexpected. There are hopes of containment and this was the reason for the rebound in equities and currencies. Global equities recovered some lost ground, while oil prices settled, albeit at elevated levels. The US Dollar retreated, with the EUR heading back towards 1.1600, while the GBP approaches 1.3600.
The reserve was also softer allowing for a recovery in commodity currencies, with the AUD reclaiming 0.6500, while the NZD broke back above 0.6050.
Local markets will be looking closely at the Bank of Japan today, expected to leave rates unchanged, despite worrying inflation levels. Geo-Political events remain the elephant in the room.
Collinson FX: June 16: Markets slump following Mid-East Fireworks
Markets tumbled, to close out what was set to be a promising to be a very strong week of gains, following Israeli attacks on Iran.
Israel launched widespread attacks on Iranian military and nuclear facilities, which triggered a military response from Tehran.
This sent markets tumbling, with the Dow Jones crashing nearly 800 points, while oil prices surged. The Middle East has been in a state of war, since the Hamas attacks in October 2023, spreading to Syria, Yemen and now Iran. The US Dollar gained ground, with the EUR falling back towards 1.1500, while the GBP slipped to 1.3550.
Commodity currencies were not immune to the turmoil, with the AUD surrendering 0.6500, while the NZD tests the downside of 0.6000. Wars are never good for markets and this widening Middle Eastern crises, only adds to the current war in the Ukraine.
This coming week will be closely focused on Central Bank interest rate decisions, led out by the BoJ and followed by the Fed, BoE and the PBoC. These may take a back seat to Geo-Political developments.