The dollar plunged on Thursday after US president Donald Trump threatened higher unilateral tariffs on trade partners, and oil slipped as traders evaluated the probability behind reports that Israel could be gearing up to strike Iran.
Stock markets in the United States, Europe and Asia all swooned on the double whammy of returning trade uncertainty and geopolitical volatility, while Boeing鈥檚 share price slumped sharply in the wake of a 787 Dreamliner crash in India.
The dollar lost one per cent against the euro, falling to its lowest point in more than three years against the European single currency.
鈥楾rump has done it again. The US president has rattled markets with fresh threats of unilateral tariff rates on several trading partners,鈥� said Fawad Razaqzada, market analyst at FOREX.com.
鈥業nvestors are now asking questions... and that鈥檚 before considering other risks that include valuations, bond market troubles, and a potential military conflict between Iran and Israel,鈥� he said.
Trump on Wednesday said he would be sending letters within the next two weeks to other countries鈥� governments to announce unilateral US levies on their exports to America.
鈥楾his is the deal, you can take it or leave it,鈥� Trump told reporters.
The return to trade belligerence eclipsed any optimism that had emerged from a putative agreement between the United States and China on Tuesday to modestly de-escalate trade tensions.
It also left the European Union staring down the barrel of 50-per cent tariffs 鈥� at least 鈥� when a pause on them ends on July 9, without any sign so far of Brussels and Washington close to reaching a trade agreement.
Markets were also following reports that Israel was poised to launch airstrikes on Iran 鈥� along with Trump saying he was now 鈥榣ess confident鈥� that talks with Tehran would end up with it rolling back its nuclear programme.
The United States is removing non-essential personnel and military dependants from the Middle East, after Iran warned it would target US military bases in the region if conflict broke out.
Iran, meanwhile, is doubling down, vowing to 鈥榮ignificantly鈥� boost uranium enrichment after the UN鈥檚 nuclear watchdog said Tehran has breached its obligations.
The finding could lead to UN sanctions on Iran suspended under the 2015 nuclear deal 鈥� now moribund 鈥� being restored under a 鈥榮napback鈥� mechanism that applies in October.
Iran is one of the top oil producing nations in OPEC. Oil prices, which had initially jumped on Wednesday on the heightened tensions, flipped direction on Thursday as investors and analysts discounted reports of imminent Israeli strikes.
鈥楢 solo Israeli strike on Iran鈥檚 nuclear program without聽US acknowledgement or support is highly unlikely鈥� and carried a 鈥榗onsiderable鈥� risk of miscalculation, said analysts at Eurasia Group, although they did say the UN nuclear agency鈥檚 censure 鈥榓dds to (the) escalatory environment鈥�.
In the end, the 鈥榯hreat of an Israeli attack gives the US more leverage during talks,鈥� they surmised.
In New York share trading, Boeing dropped more than five per cent following news that a London-bound Air India plane 鈥� a Boeing 787 鈥� carrying 242 people had crashed in Ahmedabad.
The US planemaker declared itself ready to support Air India following the crash, the first involving a Dreamliner.
