US Air Strikes in Iraq Lifts Up Safe Haven Currencies

BAGHDAD, Iran – The US air strikes on Baghdad and the news of a top-ranking Iranian general being killed has lifted safe-haven currencies to all-time highs. Gold and oil prices also rallied.

Reuters reported earlier that Iran’s Major-General Qassem Soleimani was killed alongside Iraqi militia head Abu Mahdi al-Muhandis when US air forces attacked the Baghdad airport. The Pentagon has since confirmed the news and claimed the Iranian military official planned to attack US interests in the Middle East.

The news has pushed safe haven currencies like the Japanese yen and the Swiss franc to record breaking numbers. The yen’s no-risk status has helped advanced Japan’s reputation as the largest creditor in the world.

Today the currency was up 0.5% at the end of the trading day. It also reached 107.92 against the dollar, the highest it as ever been in two months. The Japanese market was also closed today due to a national holiday, so the slim conditions amplified the move.

Another safe haven, the Swiss franc, also prevailed over the euro. The currency hit a four-month high of 1.0824.

Meanwhile, 10-year US bonds plummeted 1.814% after trading at 1.946% the previous day. It was the lowest the bonds dropped in three weeks.

According to CIBC Head of Currencies Jeremy Stretch, the drop in US yields indicate a loss of the confidence traders showed on Thursday. He also said investors like himself will be monitoring the situation with Iran and see wait for how the country will react or retaliate.

The US dollar also held its own against the euro today. The air strike has heightened tensions around the world and has prompted an increased demand for the dollar and other safe haven assets.

The USD’s strong showing sent the pound sterling down 0.2% to reach $1.3117. The GBP/USD pair also continued its descent and reached the 1.3061 support at the 200-hour Simple Moving Average (SMA).

Analysts are calculating two possible outcomes of this rate. One would be the 200-hour SMA holding. This means the rate can consolidate by either hitting the 1.3120 level or trading sideways. The other scenario would see the GBP/USD passing the SMA support and settling at the weekly pivot point of 1.3038.

The EUR/USD exchange rate also dropped today. The pair slipped by 0.3% and is presently at $1.11. Germany’s inflation numbers have also influenced the EUR/USD’s showing.

The country’s Unemployment Change numbers were higher than anticipated, but analysts are hopeful that the euro will be able to climb back up.