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The bad geopolitical news of day is that Iranian warships are nearing the Suez Canal and Israel is threatening to take actions against this “provocation.”
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In response, crude oil futures predictably rallied and the US stock market took off some of its earlier gains.
One would normally expect the US dollar, considered a safe-haven currency, to rally as well. Instead, it fell.
The dollar declined versus the euro, Swiss franc, and yen. The Dollar Index, which measures the dollar against a basket of currencies, also dropped.
The Swiss franc is arguably the safe-haven currency traders flocked to, as it rallied against all of the currencies mentioned above.
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Douglas Borthwick, managing director of Connecticut-based Faros Trading, believes that the dollar is losing its 'flight-to-quality' status to the euro.
He said the euro also rose against the dollar in the early stages of the Egypt protests and declined after the issued was partly resolved as former President Mubarak stepped down.
Email Hao Li at hao.li@IBTimes.com
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