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Market Overview

Escalating Tensions in West Asia and Global Market Impacts

On October 26th, Israel launched airstrikes on Iranian military sites, following Iran's earlier attack on Israeli soil. The strikes, reportedly resulting in Iranian casualties, have sparked intense global reactions. While leaders like President Biden and Vice President Harris urge de-escalation, Iran, Hezbollah, and Hamas view the actions as an escalation, with Iran's Supreme Leader affirming the right to defend the nation. Calls for restraint have echoed worldwide, from the UN Secretary-General to leaders in the UK, Germany, and Russia. However, Iran's allies argue that Israel's response infringes on Iranian sovereignty, potentially spiraling into a wider conflict.

The escalating situation is already affecting markets. Banks are expected to shift from risk-on assets amid increased insecurity, while the U.S. dollar is anticipated to gain strength due to economic stability. Safe-haven assets, including gold, silver, and currencies like the Swiss Franc, are expected to see demand increases. Oil prices may also rise due to supply concerns, with alternative energy sources becoming more appealing as uncertainty grows. Any further escalation could deepen regional instability, with significant economic and geopolitical consequences.

Market Analysis

GOLD - Gold has seen increased demand following last week's trading, likely spurred by sudden overnight attacks. The price has broken above 2740.844 and is expected to continue its upward momentum amid current global tensions.

SILVER - Silver is positioned for a rise from its current value and is anticipated to follow the demand trends seen in gold. While effects on silver may take longer to manifest, it should experience a notable increase in trading as global markets adjust to a potential gold shortage, leading to an expansion in silver assets.

DXY - Dollar growth is expected to continue, propelled by the implications of escalating conflicts. Current momentum aligns with both technical and fundamental indicators supporting a bullish outlook.

GBPUSD - Pound weakness is projected to persist as technical momentum is hesitant to advance. With escalating conflicts in West Asia, the EU and the UK may be pressured to respond, as failing to support Israel could signal vulnerability.

AUDUSD - Australian Dollar is likely to decline as one of the risk-on assets. Continued selling is expected in this market.

NZDUSD - Kiwi Dollar is showing further weakness with expectations of continued selling, aiming for a break below 0.59796.

EURUSD - Euro is forecasted for a downtrend as additional rate cuts remain priced in. However, this could shift if Iran retaliates against Israel, driven by concerns over oil and regional tensions.

USDJPY - Yen weakness is currently due to the Bank of Japan's indecision on rate hikes. Historically, the Yen has strengthened during economic turmoil, suggesting potential currency growth if instability persists.

USDCHF - Swiss Franc has shown a muted response, with minimal fluctuation despite fluctuations in the dollar. The Franc's movement almost mirrors the dollars demand strength, suggesting its rise against other currencies, which further pair analysis may confirm.

USDCAD - Canadian Dollar (Loonie) is expected to remain weak in the short term, although rising concerns over oil supply and a potential spike in oil prices could alter its course. Growth in the Loonie will likely be delayed until further developments with Israel‘s stance on Iran’s oil facilities unfold.