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Money Flow before the start of the new trading week

Week-ahead-1

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This week we will see the effects of the US attack that led to the death of Qassam Soleimani, the leader of the Iranian Revolutionary Guards Corps. The news of these events had a negative effect on major stock indexes and supported hedging instruments such as gold, silver, yen and reversing ETF's.

Expectations that Iran will not leave things just like that and there will be a backlash have been justified, with news in recent hours indicating that Iran will no longer abide by restrictions on uranium enrichment, thus further distancing itself from the 2015 nuclear deal year.

This, of course, brings with it the prospect of an escalation of the conflict between them and the US, with risky assets once again giving way.

For this reason, major stock indexes are also expected to start the session in the red as investor uncertainty grows and they prefer to protect their portfolios by changing their exposures from risky to risk-free assets to hedge.

In the current market situation, we expect an increased interest in risky havens, which is in favor of the already accrued gold. This, in addition to the midpoint of low interest rates and record highs, is the main reason for holding Gold for hedging. Many analysts believe prices are likely to rise further this year, with shaky growth and stock markets potentially looking volatile at record highs. Silver and platinum, which are also seen as safe investments in uncertain times, are also in strong interest.

In the Forex market, we expect the week to start strong for safe haven currencies like the Japanese yen and the Swiss franc, while pushing for the risky appetite currencies - AUD and NZD to hold.

At the same time, we expect the rise in oil prices to continue throughout the new week.

Geopolitical risks remain under the spotlight. These risks have undoubtedly been marking the markets over the last few years, but with no lasting effect. Yet geopolitics remains important, mainly because it can always become a very negative factor for markets at any given time.


 Trader Aleksandar Kumanov

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