A Sudden Shock to Global Trade
Between September and November 2023, a series of attacks on commercial vessels in the Red Sea and Bab al-Mandeb Strait disrupted one of the world’s most critical maritime trade routes.
Dozens of container ships and oil tankers were diverted from the Suez Canal, forcing them to take the longer and more expensive route around the Cape of Good Hope.
This disruption triggered a wave of consequences across commodities, currencies, and equity markets.
“In global trading, logistics are the bloodstream of the economy,” explains Calvin Yuen, Forex trader at Nexa Level X.
“When the arteries get blocked — like what happened in the Red Sea — everything from energy prices to exchange rates reacts immediately.”
Impact on Commodities: Oil and Shipping Costs Surge
The Red Sea route handles nearly 12% of global trade, including a massive portion of the world’s oil and gas shipments.
As vessels avoided the area, transport costs soared, leading to:
Brent crude jumping briefly above $94 per barrel,
Rising freight and insurance costs for global shippers,
Renewed inflationary pressure in energy-importing economies.
“For traders, this meant a short-term bullish bias in oil-linked currencies,” Yuen notes.
“Pairs like USD/CAD and NOK/USD showed clear volatility spikes as investors priced in energy supply risks.”
Forex Reactions: Safe Havens Back in Focus
Periods of geopolitical tension traditionally drive investors toward safe-haven currencies — and this time was no exception.
The U.S. dollar (USD) regained short-term strength.
The Japanese yen (JPY) and Swiss franc (CHF) also saw renewed buying interest.
Risk-sensitive currencies such as AUD and NZD weakened due to global trade uncertainty.
Meanwhile, the euro (EUR) faced pressure as European supply chains depend heavily on goods flowing through the Suez Canal.
“Whenever supply chains are under threat, the market rewards liquidity and stability,” Yuen explains.
“That’s why we saw capital flow toward USD and JPY.”
Stock and Crypto Markets Feel the Tension
The global equity market turned defensive in late October 2023 as shipping disruptions and inflation fears resurfaced.
Major indices paused their recovery rally, while crypto markets mirrored traditional risk sentiment — with Bitcoin dropping below $27,000 before rebounding in early November.
“Crypto often behaves like a high-beta asset during crises,” says Yuen.
“It’s fast to fall when uncertainty spikes, but also fast to recover once traders sense stability.”
Calvin Yuen’s Trading Perspective
Yuen used the period’s volatility to identify short-term momentum trades across both major and commodity pairs:
Long USD/JPY during peak geopolitical tension.
Short EUR/USD as European import costs surged.
Careful exposure in oil-sensitive currencies like CAD and NOK with tight risk management.
“In chaotic markets, survival is strategy number one,” Yuen emphasizes.
“You can’t control the headlines — but you can control your exposure and discipline.”
Possible Scenarios Moving Forward
Prolonged disruption – If tensions persist, global inflation could rise again, strengthening the USD.
Stabilization and rerouting – Freight companies might adapt, normalizing trade costs and easing risk sentiment.
Further escalation – Any attack on major energy infrastructure could spark another wave of market panic.
“Flexibility is key,” concludes Yuen.
“Traders who can adapt fast — not just predict — will find opportunity even in disruption.”
