Safe-haven currencies in demand amid U.S., Iran tension
LONDON (Jan 6) - The yen and other safe-haven currencies were in demand on Monday, along with assets such as gold, as investors fretted that the killing of Iran’s most prominent military commander by the United States could trigger a broader Middle East conflict.
The moves extended a flight to safety that began on Friday after Iranian Major-General Qassem Soleimani was killed in a U.S. drone strike on his convoy at Baghdad airport.
U.S. President Donald Trump warned of a “major retaliation” if Iran hit back, while Iran’s replacement commander vowed to expel the United States from the region.
On Sunday, Iran further distanced itself from the 2015 nuclear agreement with world powers, which the United States withdrew from in 2018, saying it would continue to cooperate with the U.N. nuclear watchdog but would respect no limits to its uranium enrichment work.
The Japanese yen surged on Monday to a three-month high of 107.77 versus the U.S. dollar in Asian trading and was last up 0.2% on the day at just below 108 JPY=EBS.
Spot gold was 1.6% higher XAU=, at an almost seven-year high, and oil rose on fears that any conflict in the region could disrupt global supplies. [O/R]
The Swiss franc, another safe-haven currency, was little changed close to the four-month high of 1.0824 it reached against the euro on Friday EURCHF=EBS.
Bitcoin, which some see as a digital gold, has also risen, hitting a two-week high of $7,580 BTC=BTSP.
Implied volatility gauges in euro/dollar, the most traded currency pair, were relatively calm, suggesting investors are not yet fleeing to add protection to their portfolios by buying currency options.
