Market Roundup
- Brent jumps almost $3 after U.S. air strike
- Gold rallies to 4-month high
Economic Data Ahead
- (1000 ET/1500 GMT) US ISM Manufacturing PMI (Dec)
- (1000 ET/1500 GMT) US Construction Spending (MoM) (Nov)
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count
Key Events Ahead
- (1400 ET/1900 GMT) FOMC Minutes
FX Beat
DXY: The dollar index surged as investors awaited an index of U.S. manufacturing activity, but markets will be more interested in scrutinizing the minutes from the Federal Reserve’s last meeting in December. The greenback against a basket of currencies traded 0.3 percent up at 97.08, having touched a low of 96.36 on Tuesday, its lowest since July 1.
EUR/USD: The euro plunged to a 1-week low after U.S. air strikes killed a top Iranian commander, heightening geopolitical tensions. The European currency traded 0.4 percent down at 1.1127, having touched a high of 1.1239 on Wednesday, its highest since August 7. Immediate resistance is located at 1.1188, a break above targets 1.1220. On the downside, support is seen at 1.1118 (21-DMA), a break below could drag it below 1.1100.
USD/JPY: The dollar slumped to a 2-month trough, after U.S. air strikes on Baghdad airport killed a senior Iranian military official, stoking tensions in the Middle East. The major was trading 0.5 percent down at 108.00, having hit a low of 107.91 earlier, its lowest since Nov. 1. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending, ISM manufacturing PMI and FOMC minutes. Immediate resistance is located at 109.02 (5-DMA), a break above targets 109.22. On the downside, support is seen at 107.88, a break below could take it near at 107.62.
GBP/USD: Sterling eased to 1-week low amid worries over Britain’s trade negotiations with the European Union following its expected exit from the bloc at the end of this month. The major traded 0.6 percent down at 1.3059, having hit a high of 1.3384 on Wednesday, it’s highest since Dec. 17. 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 1.3050, a break below targets 1.2989. Against the euro, the pound was trading 0.2 percent down at 85.19 pence, having hit a high of 84.53 on Wednesday, it’s highest since Dec. 17.
USD/CHF: The Swiss franc eased, extending previous session losses as the greenback rebounded from recent lows. The major trades 0.3 percent up at 0.9739, having touched a low of 0.9646 on Wednesday, it’s lowest since end September. On the higher side, near-term resistance is around 0.9765 (10-DMA) and any break above will take the pair to the next level till 0.9810. The near-term support is around 0.9674, and any close below that level will drag it till 0.9646.
Equities Recap
European shares eased after a U.S. air strike in Iraq killed a top Iranian commander, stoking tensions in the Middle East.
The pan-European STOXX 600 index slumped 0.9 percent at 416.00 points, while the FTSEurofirst 300 fell 0.7 percent to 1,626.09 points.
Britain's FTSE 100 trades 0.5 percent down at 7,568.96 points, while mid-cap FTSE 250 eased 1.0 to 21,885.90 points.
Germany's DAX declined 1.8 percent at 13,145.60 points; France's CAC 40 trades 0.6 percent lower at 6,004.43 points.
Commodities Recap
Crude oil price rallied nearly $3 after a U.S. air strike in Baghdad killed top Iranian and Iraqi military commanders, triggering concerns of disruption to Middle East oil supplies. International benchmark Brent crude was trading 4.1 percent at $68.95 per barrel by 1128 GMT, having hit a high of $69.48 earlier, its highest since September 16. U.S. West Texas Intermediate was trading 3.7 percent up at $63.57 a barrel, after rising as high as $64.05 earlier, its highest since May 1.
Gold prices rose more than 1 percent as investors flocked to the safe-haven metal after a senior Iranian military official was killed in an air strike authorised by the United States. Spot gold was up 1 percent at $1,549.28 per ounce as of 1131 GMT, having touched a high of $1550.38 earlier, its highest since September 5. U.S. gold futures rose 1.4 percent to $1,549.70.
Treasuries Recap
The U.S. Treasuries gained during the afternoon session ahead of the country’s ISM non-manufacturing PMI for the month of December, scheduled to delivered today by 15:00GMT, besides, speeches by members of the Federal Open Market Committee (FOMC), namely, Brainard and Kaplan, also due to be delivered later today. The yield on the benchmark 10-year Treasury yield plunged 6 basis points to 1.821 percent, the super-long 30-year bond yield slumped 6-1/2 basis points to 2.276 percent and the yield on the short-term 2-year traded nearly 3-1/2 basis points down at 1.543 percent.
The German bunds surged during early European session of the last trading day of the week after witnessing disappointment in the country’s employment report for the month of December, while eyes still remain on the consumer price inflation (CPI) for the similar period, due for release today by 13:00GMT for further direction in the debt market. The German 10-year bond yield, which move inversely to its price, plunged 6-1/2 basis points to -0.284 percent, the yield on 30-year note slumped 7-1/2 basis points to 0.235 percent and the yield on short-term 2-year traded nearly 3 basis points down at -0.637 percent.
The Australian bonds jumped during Asian session tracking a similar movement in the United States’ Treasuries amid thin trading day as markets are scheduled to witness data of little economic significance towards the start of this year. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4 basis points to 1.261 percent, the yield on the long-term 30-year bond slumped to 1.883 percent and the yield on short-term 2-year suffered 8 basis points to 0.829 percent.
