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Markets Rocked By US-Iran Headlines

Jan 3 2020, 08:57 PM (+06) |

USD Rallies

USD ends the week firmly higher as a worrying escalation in tensions between the US and Iran has seen equities under pressure and USD higher on safe-haven inflows. Looking ahead today, we have the ISM manufacturing reading for December followed by the December FOMC meeting minutes. However, the impact of these might be muted in the wake of geopolitical developments. USD index trades 96.69 last.

EUR Lower

EURUSD has come under heavy selling pressure today in light of the rally in USD. Domestic data weakness over the week has also weighed on EUR with a slew of EZ member-states seeing weak readings.

Both German and eurozone manufacturing PMIs came in below expectations earlier in the week. EURUSD trades 1.1142 last, back below the 1.1166 level for now.

GBP Down

GBPUSD has also been lower today as the theme of a stronger USD dominates the final trading day of the week. Earlier in the week, UK manufacturing data was better than expected.

However, the sector remains in negative territory. For now, focus remains on Brexit negotiations which are due to move into the next phase at the end of the move. GBPUSD trades 1.3078 last, still above 1.2967 as of writing.

SPX500 Retreats

Risk assets have come under heavy selling pressure this morning following reports that the US has killed the top Iranian general in a drone strike overnight. The move has greatly increased fears of a full-scale military conflict with Iran declaring that it will seek revenge on the US. SPX500 trades 3224.43 last.

Gold Up, JPY Down

Safe havens have had a mixed day today. While gold has been higher against USD, JPY has been weaker given the extent of the rally in USD and the preference to use the greenback as a safe haven at this point.

XAUUSD trades 1545.81 last, rallying firmly above the 1522.75 level now. USDJPY trades 108.12 last, with price rallying back up off the recent 107.91 lows.

Crude Rallies on Middle East War Fears

Oil prices have been firmly higher today. Despite the moves lower in risk assets, the prospect of further military conflict in the Middle East raises supply concerns, keeping crude prices supported here.

Later today, traders will get the delayed EIA inventories report which is expected to show a further drawdown in US crude stores and should send oil higher still. Crude trades 63.30 last.

Loonie Holding Ground

USDCAD has managed to trade in the green today. Despite the rally in crude prices, it seems that strength in USD is taking center stage today. Canadian manufacturing data released this week showed the sector plummeting to four-month lows last month which is also weighing on CAD. USDCAD trades 1.2988 last.

AUD Down

AUDUSD has been heavily lower today as the sad story of the bushfires in Australia raises fears over damage to the economy following the massive damage suffered b the environment. The rally in USD is adding further pressure here with AUDUSD trading .6936 last, nearing support at the .6926 level.

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