The overnight ground attack on Iraq ended months of uncertainty about when the war would break out. Investors shifted their focus onto how long it would actually last, putting many European financial markets into a holding pattern ahead of a broader US-led offensive.
On the foreign exchange market, the dollar was holding just below two-month highs against the Euro and Swiss franc. Earlier the greenback fell one percent against both currencies. Liquidity was thin and trading volatile as dealers tried to gauge how long the war would last.
"It is widely expected that the war will end within a quarter. In that case, the US dollar will be able to hold its exchange rate on the foreign exchange market. However, it all eventually depends on the duration of the war," analyzed Cao Yuanzheng, chief economist of BOC International Holdings Limited.
Meanwhile the price of gold edged back in early afternoon trading as the start of war failed to attract investors to the safe-haven market.
Pu Jiuli from Agricultural Bank of China said: "If the war ends quickly, the gold price will hold at its current level. However, if the war goes on too long, gold will be used as a tool to minimize risks, and the gold price will fluctuate. The price of gold on the international market is tied to the war."
The outbreak of war has sparked flight cancellations by airlines around the world, with demand for tickets expected to fall by up to 20 percent during the crisis. Experts said airlines were set to raise fares and slash jobs, shaking a sector already struggling amid an economic slowdown and rising international tensions.
CCTV.com
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