Market quiet on the Middle Eastern front
The Middle East is dominating world news again, as the awful moment has come when Israel and Iran have engaged in open and direct conflict, albeit at great distance. That the warfare is across considerable distances makes it different to close conflicts like the Ukraine war, and introduces a clear danger that war could spread across the Middle East – a region that is still of great importance to the global economies’ oil supply.
Mexican peso going strong
The strength of the US dollar has attracted media attention in recent weeks. The world’s reserve currency is usually considered a ‘safe haven’ asset, so its strength is sometimes taken as a sign of global geopolitical nerves – of which there are plenty right now. In actual fact, the dollar has been strong for quite a while, particularly against the stereotypically riskier currencies of Emerging Markets (EMs). EM currencies have struggled against the dollar through the latest cycle of interest rate hikes – since higher risk-free rates cause global investors to pile money back into the world’s largest economy. But even before that, the prolonged period of US growth outperformance was hard on EMs.