The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Win Thin NEW YORK ( BBH FX Strategy) -- How about that Axis of Evil? One could make the argument that Iraq and North Korea are out of play now, leaving only Iran as the sole remaining member. Markets remain very nervous about the risks of an Israeli attack on Iranian nuclear facilities, with Intrade showing a 36% chance of such an attack by year-end. Although that's down from the high around 62% in mid-February, the odds are not insignificant and remain above the year-end odds around 22%.
The current Middle Eastern tensions aren't just affecting crude oil prices. The Israeli shekel and that nation's stock market are among the worst performers in this year's emergin-market rally, which we think is due in large part to the Iran issue. Israel fundamentals remain fairly strong, but they are being overwhelmed by the geopolitical concerns. If the Iran issue can be successfully addressed, we would expect some catch-up in Israeli assets to the rest of emerging markets. Indeed, the dollar/shekel on Friday broke and closed above the 62% retracement level of the 2012 drop at around 3.80 and this targets the January high around 3.8654.