Risk appetite limited on cautious Fed, rising Middle East worries

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‘Someone has to pay,’ said Federal Reserve (Fed) Chair Jerome Powell at yesterday’s post-decision presser, after the Fed kept rates unchanged as widely expected – and priced in – by global markets. Stocks fell despite lower yields.
The US dollar was in doji mode yesterday but is stronger this morning, perhaps supported by a relatively cautious Fed tone and some flight to safety. There are rumours the US could become directly involved in Middle East tensions as soon as this weekend. That alone could attract defensive flows into the dollar ahead of a potentially critical weekend – regardless of Fed policy.
There’s also little reason to pile into risk assets amid such elevated geopolitical risk. If tensions escalate, there’s arguably no better shelter than oil, gold, the US dollar, and the Swiss franc.
Today, it’s Bank of England’s (BoE) turn to announce no change, while the Swiss just cut its policy rate to 0%.
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