The Israeli strike on Iranian military and nuclear infrastructure has triggered a surge in geopolitical risk across the Middle East. This event is not just a one-off flare-up it raises the possibility of a broader regional escalation involving global powers, which is causing global risk sentiment to deteriorate sharply.

In that environment, investors rotate out of risk-sensitive currencies like the Australian dollar (AUD) and into relatively safer or commodity-supported currencies like the Canadian dollar (CAD). The sharp rally in crude oil due to fears of supply disruption from the region further boosts CAD as Canada is a major energy exporter.

Geopolitical Shock: The Israeli offensive on Iran’s nuclear sites marks a significant escalation and is not expected to be short-lived. Iran’s potential retaliation could lead to higher oil prices, closed airspaces, and broader market instability.

Risk Sentiment: AUD is typically sold off in global uncertainty due to its close ties with Chinese growth and commodities that are sensitive to global demand.

Oil Surge & CAD Strength: Brent and WTI crude have surged over 5–6% in response to the strikes. This strengthens the Canadian dollar as oil exports are a major part of Canada’s trade balance and GDP.

Flight to Quality Rotation: Markets are unwinding risk-on trades, favoring currencies like CAD that are backed by hard assets and less exposed to global trade disruptions.

SHORT AUDCAD

Jun 13 2025

Pending

Published 31d ago

0.89909

Current price

0.88238

Entry price