Scotiabank’s global FX strategy team reports broad Dollar strength as G10 performance realigns with early US/Iran conflict patterns. They stress fragile risk sentiment as markets reassess prolonged conflict risks, central bank paths and violent yield repricing. Oil benchmarks diverge, while Copper and Gold show signs of technical stabilization after recent swings.

Dollar firm as conflict risk repriced

“The USD is ending the week with broad strength as the G10 currencies return to a relative performance distribution that mirrors the early stages of the US/Iran conflict.”

“This week’s attacks on major Iranian gas fields and critical Qatari LNG export facilities have left markets and policymakers contending with the increasing possibility of a lengthened conflict and an even more protracted timeline for repairing the damage that is still being done.”

“Yields are up materially over the past few days with exceptionally violent moves in the UK, as markets responded to Fed caution and an increasingly qualified dovishness, a decidedly hawkish ECB, and an unexpectedly aggressive U-turn from the BoE.”

“For the Fed, the shift is one of fading expectations for easing where fed funds futures are now pricing very little in terms of policy changes in either direction though September 2027.”

“Returning to markets, the prices of oil have diverged somewhat with WTI showing signs of stabilization in the mid-$90/bbl range as Brent—the global benchmark—has seen a renewed rally on the back of the latest escalation in tensions with a push toward $100/bbl.”

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