Market Roundup
- Oil surges on Iran, Trump trade threats
- Gold rises to near 7-year high on U.S.-Iran tensions
- Eurozone December business activity close to stagnation
- Eurozone investor morale jumps to highest since November 2018: Sentix
Economic Data Ahead
- (0830 ET/1330 GMT) Canada Raw Material Price Index (Nov)
- (0830 ET/1330 GMT) Canada Industrial Product Price (MoM) (Nov)
- (0945 ET/1445 GMT) US Markit Services PMI (Dec)
- (0945 ET/1445 GMT) US Markit PMI Composite (Dec)
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index declined as a combination of low U.S. unemployment, weak inflation and low-interest rates have the U.S. Federal Reserve grappling with how to fight the next recession. The greenback against a basket of currencies traded 0.4 percent down at 96.56, having touched a low of 96.36 on Tuesday, its lowest since July 1.
EUR/USD: The euro rose, halting a 2-day losing streak after data showed morale among investors in the eurozone jumped for the third month in a row in January, boosted by positive economic news from Asia and signs of an easing in U.S.-China trade tensions. The European currency traded 0.4 percent up at 1.1196, having touched a high of 1.1239 on Wednesday, its highest since August 7. Immediate resistance is located at 1.1213, a break above targets 1.1249. On the downside, support is seen at 1.1138 (10-DMA), a break below could drag it below 1.1122.
USD/JPY: The dollar plunged, extending losses for the sixth straight session, as investors fretted that the killing of Iran’s most prominent military commander by the United States could trigger a broader Middle East conflict. The major was trading 0.05 percent down at 108.02, having hit a low of 107.77 earlier, its lowest since Oct. 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Markit service and composite PMI. Immediate resistance is located at 108.25, a break above targets 108.46. On the downside, support is seen at 107.52, a break below could take it near at 107.03.
GBP/USD: Sterling steadied above the 1.3100 handle as Britain prepares to leave the European Union and begins negotiations with the EU over their future trading relationship. The major traded 0.7 percent up at 1.3162, 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 1.3213, a break above could take it near 1.3250. 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 up at 85.12 pence, having hit a high of 84.53 on Wednesday, it’s highest since Dec. 17.
USD/CHF: The Swiss franc rallied after easing for two straight sessions, as investors rushed into the safety of safe-haven assets after Iranian Major-General Qassem Soleimani was killed in a U.S. drone strike on his convoy at Baghdad airport. The major trades 0.3 percent down at 0.9690, having touched a low of 0.9646 on Wednesday, it’s lowest since end September. On the higher side, near-term resistance is around 0.9756 (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 plunged as tensions following the killing of a top Iranian general by the United States stoked safe-haven buying.
The pan-European STOXX 600 index slumped 1.1 percent at 413.84 points, while the FTSEurofirst 300 fell 0.9 percent to 1,619.78 points.
Britain's FTSE 100 trades 0.9 percent down at 7,547.45 points, while mid-cap FTSE 250 eased 1.1 to 21,743.55 points.
Germany's DAX declined 1.6 percent at 13,011.28 points; France's CAC 40 trades 1.1 percent lower at 5,978.60 points.
Commodities Recap
Crude oil prices surged by more than 2 percent as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after the killing of a top Iranian general. International benchmark Brent crude was trading 1.1 percent up at $69.40 per barrel by 1045 GMT, having hit a high of $70.73 earlier, its highest since May 23. U.S. West Texas Intermediate was trading 1.0 percent up at $63.71 a barrel, after rising as high as $64.69 earlier, its highest since April 30.
Gold prices rallied close to a 7-year peak as investors flocked to the safe-haven metal on escalating U.S.-Iran tensions. Spot gold rose 1.5 percent to $1,577.12 per ounce by 1049 GMT, having touched a high of $1588.16 earlier, its highest since April 10, 2013. U.S. gold futures gained 1.6 percent to $1,577.20.
Treasuries Recap
The U.S. Treasuries remained flat during the afternoon session after reacting to the Iranian news over the weekend; the S&P 500 opened lower this morning in the wake of ongoing tension in the Middle East. Today’s economic calendar remains nearly empty, with barely any data of huge economic significance. The yield on the benchmark 10-year Treasury yield hovered around 1.783 percent, the super-long 30-year bond yield remained flat at 2.246 percent and the yield on the short-term 2-year too traded steady at 1.530 percent.
The German bunds jumped during European session at the start of the week tracking a similar movement in the United States’ Treasuries after the U.S. killed a top Iranian military general Soleimani, which in turn, weighed on stocks and hence, investors’ sentiments. The German 10-year bond yield, which moves inversely to its price, slipped 1 basis point to -0.292 percent, the yield on 30-year note also fell 1 basis point to 0.239 percent and the yield on short-term 2-year traded 1-1/2 basis points down at -0.633 percent.
The Australian bonds surged during Asian session of the first trading day of the week as investors turned risk-averse, after the United States’ carried out a strike on Iranian military general Soleimani. This in turn, triggered the benchmark S&P 500 index to post its biggest decline in a month as UST bonds rallied to push the 10-year bond yield down 9bps to 1.79 percent, whilst gold prices rose to $1,588 an ounce (highest since April 2013) as safe haven demand rose. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 5 basis points to 1.212 percent, the yield on the long-term 30-year bond slumped 5-1/2 basis points to 1.824 percent and the yield on short-term 2-year suffered 3-1/2 basis points to 0.797 percent.
