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There are unconfirmed reports in the Iranian press about Israeli planes landing in Saudi Arabia, unloading military equipment as a preparation for an air strike in Iran. This could be the reason for the drops in European stocks this morning, and gains in the US dollar.

According to Israel’s Globes, this is what’s causing fear in the markets:

A trader told “Globes”, “This is the talk of the day in London. Traders there interpret the report to means that Israel may be close to attacking Iran, hence the fears and market losses.”

The US dollar index rose from 85.60 in the early hours of the European morning to 86 later in the day. This is felt in EUR USD as well as the commodity currencies. Another “safe haven” currency, the Japanese yen, is also on the move: USD/JPY fell to 89.25 before bouncing a little bit higher.

This report about the preparations in Saudi Arabia join other unconfirmed reports about 12 American warships that crossed the Suez canal from the  Mediterranean to the Red Sea on their way to Iran. There’s an additional report about martial law in northwest Iran, in fear that an Israeli-American attack will come from  Azerbaijan  and Gergioa.

It’s important to emphasize that none of these reports are confirmed. Nevertheless, rumors have an impact on the markets, at least a temporary impact. With nothing else to move the markets during the European session, these rumors could be driving risk aversive trading.

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