Soleimani was the head of Iran’s Islamic Revolutionary Guard Corps’ (IRGC’s) elite Quds Force. Iraqi militia commander Abu Mahdi al-Muhandis was also killed in the attack which took place at Baghdad airport.
Late on Thursday night, the Pentagon stated: “At the direction of the President, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing Qassem Soleimani.”
Iranian Foreign Minister Mohammad Javad Zarif was quick to condemn the attack, tweeting; “The US’ act of international terrorism, targeting & assassinating General Soleimani—THE most effective force fighting Daesh (ISIS), Al Nusrah, Al Qaeda et al—is extremely dangerous & a foolish escalation. The US bears responsibility for all consequences of its rogue adventurism.”
Tensions escalated on December 27th, when a U.S. civilian contractor was killed in a rocket attack on a military base near Kirkuk, Iraq. The U.S. retaliated with air strikes against Iranian-linked militia fighters in Iraq and Syria, reportedly killing 24 people. Anger over these casualties led to this week’s attacks by Iraqi militiamen on the U.S. Embassy in Baghdad.
Gold and the Japanese Yen are primary safe havens in times of geopolitical instability and both rallied sharply on the latest news. Oil prices also spiked higher with WTI crude oil reaching its highest levels since April of 2019. U.S. stock index futures currently point to a lower open.
Investors now turn their attention to the minutes of the Federal Reserve’s December policy meeting, due to be released later on Friday. In December, the Fed held the target range of the federal funds rate steady at 1.5% to 1.75% and signaled that it could continue to hold rates where they are through 2020.
Fed Chairman Jerome Powell said it would take a “material reassessment” in the outlook to warrant a shift in policy and that he would prefer to let inflation rise and hold above its 2% target before considering future interest rate hikes. Lower interest rates increase the appeal of non-yielding assets such as gold.
This article was written by Dan Blystone, Chief Market Strategist at Scandinavian Capital Markets.
This article was originally posted on FX Empire
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