Back to insights News

Iranian sanctions trigger flight to save havens

The greenback is losing steam amid the prospects of a Fed rate cut and geopolitical tensions between the US and Iran.

Iranian sanctions trigger flight to save havens

The Dollar has lost steam, having hit a multi-month low against the Euro and the Yen this morning on the prospects of monetary easing by the Federal Reserve, while the safe-haven Swiss Franc and gold rose amid US-Iranian tensions.

The Fed last week signalled it could cut interest rates before the end of 2019 as concerns over the protracted tariff war US President Donald Trump is waging against China and other trading partners are mounting.

The Euro hit a three-month high of $1.14105, having gained 2.0 per cent from a two-week low of $1.1181 a week ago. The greenback also slipped 0.35 per cent to 106.93 against the Yen, its lowest since its flash crash in early January, and to 0.9710 against the Swiss Franc, its lowest since last September.

Investors are waiting to see whether Trump and Chinese President Xi Jinping would at least call a truce in their trade war when they meet at the G20 summit in Osaka, Japan later this week.

If there’s no trade agreement, Trump’s administration could levy tariffs on an additional $300 billion’s worth of Chinese imports as early as next month, a step that would cement expectations of a large rate cut by the Fed.

The Dollar’s weakness is most notable against traditional safe-haven assets amid tensions between Washington and Tehran.

Trump targeted Iran’s Supreme Leader Ali Khamenei and other top officials with sanctions on Monday, 24 June, taking an unprecedented step to increase pressure on Tehran, following the downing of an unmanned US drone near the Strait of Hormuz.

Trump signed an executive order imposing the sanctions, which US Treasury Secretary Steven Mnuchin said would lock billions of Dollars more in Iranian assets.

Gold shot up 0.85 per cent to $1,431.2 per ounce, its highest level in nearly six years.

Related Insights

Oil gains on growing geopolitical tensions

Dollar weakens on market reset expectations

 

Data provided by

Related Insight

More Insights