Volatility stirs in the global financial markets following the U.S drone attack that killed Iranian leader

Volatility stirs in the global financial markets following the U.S drone attack that killed Iranian leader
Written by:
Michael Harris
5th January, 16:06
Updated: 11th March, 09:14
  • U.S drone attack in Iraq kills Iranian General Qasem Soleimani.
  • Japanese yen hiked to a three-month high following the news.
  • Combined with downbeat economic data from ISM, U.S dollar index dropped back to 96.45 level.
  • Anticipating supply disruptions, oil prices were reported to have gained $3 on Friday.
  • Iran vows to take revenge as President Trump threatens to hit 52 Iranian sites if it does so.

As per the news on Friday, a senior military official of Iran, General Qasem Soleimani has been killed by the U.S airstrike in Iraq. Following the news, the Japanese yen was seen gaining strength in the forex market that ended in a three-month high. The U.S dollar on the other hand immediately lost traction in the currency market that was further worsened due to the ISM’s data that revealed U.S manufacturing activity at its worst in over a decade.

General Qasem Soleimani Was The Most Influential Military Commander Of Tehran

General Qasem Soleimani was known as the most influential military commander of Tehran. The overnight strike also saw gold and German bunds rally on Friday. According to Cambridge Global Payment’s chief market strategist, Karl Schamotta, the single incident has stirred major geopolitical risk that is likely to keep the global financial markets under pressure with investors looking desperately for safe havens.

With an over 0.50% increase for the day, JPY was last seen trading as high as 108.08. Owing to Japan’s reputations as the largest creditor across the globe, Yen is usually considered as a safe haven. Analysts cited a sharply increasing investors’ interest in Yen following the U.S strike to have contributed to the major hike in the currency pair.  

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The U.S strike combined with the downbeat ISM’s data for U.S manufacturing activity also saw the U.S dollar index to drop back below 97.00 mark. The index was last seen trading as low as 96.45.

Oil Prices Hiked By $3 Following The U.S Drone Attack

Other markets affected by the overnight strike included that of oil. Anticipating supply disruptions, oil prices were reported to have hiked by $3 on Friday. The complications, however, are not yet over. Iran has already vowed revenge for the killing of its supreme commander. In response, the U.S President Donald Trump threatened on Saturday that 52 of the Iranian sites will be hit hard if Iran retaliates. The U.S drone attack also killed an Iraqi militia leader on Friday that led to thousands of people in Iran and Iraq marching the roads to mourn the deaths of their leaders.

Owing to the rising geopolitical tensions following the drone strike, analysts are expecting volatility in the global financial markets to stay in the upcoming weeks. Experts further added that there is no way to be sure of the extent to which the situation may be aggravated in an event that Iran responds aggressively to the United States of America.  

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