The Pentagon announced that the US has killed Qassem Soleimani who was a key Iranian military commander. Soleimani, one of the most powerful men in Iran, was killed in an airstrike at Baghdad International Airport. He was the leader of the Revolutionary Guards’ Quds Force, which the US deems a foreign terrorist organization. Tensions in the region escalated to new heights.
The Pentagon confirmed the strike, saying Soleimani was actively developing plans to attack Americans in Iraq and the Middle East. Iran has made it clear that it won’t acquiesce. The Supreme Leader Ayatollah Ali Khamenei calling Soleimani a martyr and vowing revenge for his death. Meanwhile, Russia offered Iran condolences and called the US airstrike a mistake.
Since Iran assured imminent retaliation, some US points of interest are in defense mode. The U.S. embassy in Baghdad on Friday urged all citizens to “depart immediately”.
Oil prices, safe heavens and gold rallied.
START TRADINGMarkets – Safe heavens jump after US drone strike kills Iran’s top general
- When investors become risk averse on the back of a risk event in the markets, they tend to offload current positions.
- Traders were clearly spooked after the death of Iranian Major-General Qassem Soleimani.
- Traders will be watching preliminary German inflation numbers for December, due at 1300 GMT.
- Preliminary data in France showed inflation beating market expectations, rising to 1.6% from 1.2%.
- An index of U.S. manufacturing activity is also due at 1500 GMT. But markets will be more interested in scrutinizing the minutes from the Fed’s last meeting in December.
- The Middle East-focused oil markets saw the most dramatic moves.
Forex – Safe heavens jump after Iran’s top general death
The U.S. dollar hit a one-week high versus the euro.
The Japanese yen hit a two-month high of 107.92 against the U.S. dollar and was last up 0.5% on the day. The Japanese currency is often seen as a haven from risk, given the country’s status as the world’s largest creditor nation.
The Swiss franc, another currency perceived as safe, surged to a four-month high of 1.0824 against the euro.
A stronger pound sent the dollar down 0.6% to $1.3058 and 0.2% lower against the euro at 85.19 pence.
Brent crude futures jumping nearly $3, or 4.5%, to $69.20 a barrel – also to the highest since September. WTI crude was up $2.53 or 4.1% at $63.71 a barrel, having earlier spiked to $64.09 a barrel, its highest since April 2019.
Gold, the other traditional refuge for risk-averse investors, rose 1% to a four-month high of $1,543. For the week, it has gained about 2% and is heading for a fourth consecutive weekly increase.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money