US-Iran Tensions Escalate as Global Markets Take a Hit

Global markets are experiencing another volatile day due to ongoing tensions between the US and Iran. The US Central Command (CENTCOM) announced that forces successfully completed a wave of strikes against Iranian military targets on September 1st.

Iran's Islamic Revolutionary Guard Corps (IRGC) retaliated with missile and drone attacks on US bases in Iraq, as well as a US base in Bahrain. Two tankers were also reported to have been blown up after striking mines in the Strait of Hormuz.

As a result, global equities are pulling back, with NQ futures falling below 29k. The US dollar is firming against most peers, except for the Japanese yen (JPY), which is outperforming due to hawkish comments from BoJ Takata. However, it's worth noting that Takata is a known hawkish dissenter and his views may not be representative of the rest of the board.

The Reserve Bank of New Zealand (RBNZ) raised interest rates by 25 basis points to 2.75%, but failed to impress hawkish expectations. The kiwi dollar was pressured against all G10 currencies, and is expected to remain weak in this risk-averse environment.