Market Roundup
- Oil jumps as Iran rocket strike on U.S. forces
- Gold soars past $1,600/ounce
- Japanese yen at 3-month high
Economic Data Ahead
- (0500 ET/1000 GMT) EZ Economic Sentiment Indicator (Dec)
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index nudged lower following steep declines in U.S. Treasury yields. The benchmark 10-year Treasury notes yielded 1.7188 percent, down more than 10 basis points from a U.S. close of 1.825 percent on Tuesday. The greenback against a basket of currencies traded flat at 96.95, having touched a low of 96.36 last week, its lowest since July 1.
EUR/USD: The euro held near previous session lows, amid market fears of an all-out conflict between the United States and Iran. The European currency traded flat at 1.1152, having touched a low of 1.1125 on Friday, its lowest since December 27. Investors’ attention will remain on a series of data from the eurozone economies, EZ economic sentiment indicator and ECB De Guindos speech ahead of the U.S. ADP employment change, consumer credit change and Fed Brinard's speech. Immediate resistance is located at 1.1180, a break above targets 1.1205. On the downside, support is seen at 1.1130 (21-DMA), a break below could drag it below 1.1101.
USD/JPY: The dollar plunged to a 3-month low after a rocket attack on a base hosting U.S. troops in Iraq renewed fears of a broader conflict breaking out in the Middle East. The major was trading 0.1 percent down at 108.37, having hit a low of 107.65 earlier, its lowest since Oct. 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, consumer credit change and Fed Brinard's speech. Immediate resistance is located at 108.74, a break above targets 109.00 (21-DMA). On the downside, support is seen at 107.52, a break below could take it near at 107.31.
GBP/USD: Sterling rose, reversing some of its previous session losses, amid expectations that Britain will finally leave the bloc this month. Investors now cautiously await British lawmakers vote on Prime Minister Boris Johnson’s European Union (EU) withdrawal deal. The major traded 0.1 up at 1.3132, having hit a low of 1.3053 on Friday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3229, a break above could take it near 1.3284. On the downside, support is seen at 1.3070, a break below targets 1.3000. Against the euro, the pound was trading 0.1 percent up at 84.93 pence, having hit a high of 84.53 last week, it’s highest since Dec. 17.
AUD/USD: The Australian dollar plunged to a 3-week low after Iran’s missile attack on U.S.-led forces in Iraq earlier today. The attack came hours after the funeral of an Iranian commander whose killing in a U.S. drone strike has raised fears of a wider conflict in the Middle East. The Aussie trades 0.05 percent down at 0.6868, having hit a low of 0.6850 earlier, it’s lowest since Dec. 19. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6838, a break below targets 0.6813. On the upside, resistance is located at 0.6898, a break above could take it near 0.6928.
NZD/USD: The New Zealand dollar declined to a 2-1/2 week low following Iran’s missile attacks on the Ain Al-Asad air base and another in Erbil, Iraq. The Kiwi trades 0.05 percent down at 0.6615, having touched a low of 0.6617 earlier, its lowest level since Dec. 23. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6680 (5-DMA), a break above could take it near 0.6710. On the downside, support is seen at 0.6596, a break below could drag it below 0.6554.
Equities Recap
Asian shares plunged after Iran fired rockets at Iraqi airbases hosting U.S. military forces, stoking fears of a wider conflict in the Middle East.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.0 percent.
Tokyo's Nikkei fell 1.2 percent to 23,282.79 points, Australia's S&P/ASX 200 index declined 0.2 percent to 6,811.50 points and South Korea's KOSPI tumbled 0.7 percent to 2,160.38 points.
Shanghai composite index eased 0.6 percent to 3,087.13 points, while CSI 300 index traded 0.5 percent down at 4,140.23 points.
Hong Kong’s Hang Seng traded 0.7 percent lower at 28,105.50 points. Taiwan shares shed 0.2 percent to 11,867.83 points.
Commodities Recap
Crude oil prices surged to their highest in months after Iran attacked American forces in Iraq in response to a U.S. strike that killed an Iranian general last week. International benchmark Brent crude was trading 1.3 percent higher at $69.17 per barrel by 0338 GMT, having hit a high of $71.31 earlier, its highest since May 22. U.S. West Texas Intermediate was trading 1.4 percent up at $63.53 a barrel, after rising as high as $65.62 earlier, its highest since April 25
Gold prices rallied by more than 2 percent, surpassing the key $1,600 level, as investors sought cover in the safe-haven assets after Iran fired rockets at Iraqi airbase which hosts U.S. forces. Spot gold rose 1.3 percent to $1,592.02 per ounce by 0347 GMT, having touched a high of $1611.27 earlier, its highest since March 2013. U.S. gold futures rose 2 percent to $1,605.80.
Treasuries Recap
The prices on Japanese government bond futures jumped and yields fell across the curve after Iran launched missile attacks on U.S. forces in Iraq. The benchmark 10-year JGB futures climbed 0.23 point to 152.37. The 10-year JGB yield fell 2 basis points to minus 0.030 percent. The 20-year JGB yield fell 3 basis points to 0.260 percent, while the 30-year JGB yield dropped 2.5 basis points to 0.405 percent. The yields on super-long 40-year JGBs fell 1 basis point to 0.445 percent. The five-year yield dropped 1.5 basis points to minus 0.130 percent. At the short-end of the curve, the two-year JGB yield declined 1 basis point to minus 0.135 percent.
