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CAD

Mideast conflict deepens, threatening global markets

The dollar is on course for its strongest monthly performance since July and Brent crude is tracking what could be a record monthly gain as the US-Israeli war against Iran devolves into a protracted regional conflict. In an interview with the Financial Times last night, US president Donald Trump said “To be honest with you, my favourite thing is to take the oil in Iran but some stupid people back in the US say: ‘why are you doing that?’ But they’re stupid people”. “Maybe we take Kharg Island,” he said, “maybe we don’t. We have a lot of options,” alluding...

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War, what is it good for?

• Conflict concerns. Risk sentiment negative. Oil prices higher. Equities lower. USD edging up. AUD & NZD on the backfoot. AUD ~4.7% from its March peak.• Global economy. More volatility likely. Impact on world economy from energy supply shock still in the pipeline. Cyclical/growth-linked assets under pressure. Global Trends Middle East related nervousness kept sentiment negative at the end of last week. Worries the conflict (which is now in its 5th week, and showing no signs of improving) will generate a “stagflationary” environment for the world economy (i.e. higher inflation and slower growth) are front of mind. The Strait of...

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Rattled markets

• Negative vibes. Ongoing concerns about the Middle East conflict weighed on sentiment. Equities lower, oil & yields higher. USD firmer. AUD under pressure.• Twists & turns. Situation in Middle East remains uncertain. More volatility likely. Impact on world economy from energy supply shock still in its infancy. Global Trends Middle East related concerns weighed on risk sentiment once again with markets questioning the chance of a diplomatic solution to end the conflict. According to various reports, the US has proposed a 15-point peace plan and is aiming for a quick resolution, while Iran responded with its own 5-point. The...

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Iran optimism fades, leaving FX markets bracing for more turbulence

Good morning. Risk appetite is deteriorating across the financial system as the Middle East conflict shows little sign of easing ahead of President Trump’s deadline for resuming military strikes against Iranian power plants and energy infrastructure tomorrow. Although there are clear signs of political exhaustion in Washington, Iran yesterday rejected the administration’s maximalist overtures, and Axios is reporting that the Pentagon is preparing options for a major escalation, possibly including the deployment of ground forces. Brent crude is back above $107 a barrel, West Texas Intermediate is climbing through $94, and European natural gas futures are pushing higher as prospects...

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Markets rally on peace hopes

A wave of cautious optimism is washing over financial markets after the United States reportedly offered Iran a 15-point peace plan, reinforcing the belief that Washington is looking for an exit from the conflict. Details of the proposal are unclear, but investors are turning more hopeful* even as the Strait of Hormuz remains effectively closed, attacks continue on both sides, and more American troops are deployed to the theatre, Treasury yields are edging lower, equity futures are setting up for a gain at the open, and the dollar is retreating against a basket of its major rivals.​​​​​​​​​​​​​​​​ The pound is...

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