El dirigente de Hamás, Ismail Haniyeh,
© Vahid Salemi / Associated PressHamas said its political leader was killed in an airstrike in Tehran that it blamed on Israel. Ismail Haniyeh was in the Iranian capital for the inauguration of the new president on Tuesday. The Israeli military declined to comment.
Israel's shekel headed for the biggest three-day selloff in two years as traders worried the killing of Hamas political leader Ismail Haniyeh on Iran's soil raised the danger of a broader Middle East war.

The currency fell as much as 1.2% to 3.7886 per US dollar after Hamas blamed Israel for the airstrike in Tehran. That took its three-day decline to 3.3%, the worst in the world only after the recently floated Ethiopian birr. Israel's 10-year sovereign yield rose 4 basis points to 4.97%.

In nearly 10 months of war between Israel and Hamas, investors had repeatedly hoped for a return to peace, leading to sporadic resilience in the shekel as well as the country's stock and bond markets.


Comment: Israel has made it quite clear that they do not intend to work towards peace. Bear in mind that, whilst they have yet to admit they were responsible for the assassination of the Hamas' peace negotiator, they do admit that within 24 hours they bombed Beirut in another attempted assassination, they bomed Syria, and, of course their Western backed Gaza genocide is ongoing.


But as cease-fire talks in Gaza drag on, the latest events have eroded traders' optimism in a quick resolution, and fear is growing that Iran and its allies will be drawn into direct conflict with Israel.


Comment: Iran isn't blinded by pathology, and it seems that it will continue with the long game; of which, Israel's flailing economy is but one part: Iran tells UN it will retaliate against Israel's assassination with 'special operations'


"It is difficult to see a scenario where Iran does not respond given that this was an attack not just on Iranian soil, but targeting a guest of the new President in Tehran itself," said Nick Rees, FX strategist at Monex Europe Ltd. in London. "It is hard to see a scenario where the shekel does not continue to trade under pressure, unless and until both sides step back from the brink."

shekel
This week's selloff has pushed the shekel to trade near the weakest level since April after it breached multiple support levels at the 50-day, 100-day and 200-day moving averages. Its volatility is surging too: one-month implied swings, based on options prices, have jumped for five successive days, the longest streak since November.

Iran's Foreign Ministry Spokesman Nasser Kanaani said Haniyeh's killing "will strengthen the deep and unbreakable bond between the Islamic Republic of Iran, dear Palestine and the resistance."

Meanwhile, Lebanon's Prime Minister Najib Mikati warned of things "getting worse" and the Houthis condemned what they called an "Israeli assassination" and "great escalation."