The dollar edges slightly higher today amid drop in volatility; markets watch for Iran retaliation

The dollar is higher today versus G-10 counterparts amid a drop in volatility. Traders remain cautious as the world waits for Iran’s promised retaliation. Eurozone CPI rose mostly due to an increase in fuel prices. Economic impacts from the Australian wildfires are expected to hit GDP and could potentially lead to another rate cut.  

“Every drop in the ocean counts”
Yoko Ono
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    January 7, 2020

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    The dollar edged slightly higher as volatility drops and asset prices rise as traders downplay recent threats of retaliation by Iran. Oil and gold gave back gains as markets speculated that Iran would be unlikely to hit against the US in a way that disrupts its own exports. Traders and markets will watch closely as the situation unfolds. November trade balance came in at -$43.1B versus -$43.6B leaving the dollar little changed against major counterparts.


    The pound fell slightly today amid profit taking from investors. UK Parliament is set to return today from Christmas break. The Brexit deal is expected to pass in parliament this week where the conservatives hold majority before it moves to the House of Lords.


    The euro is slightly lower. Eurozone CPI rose from 1% in November to 1.3% in December; fuel prices were the main driver.


    The loonie fell versus the US dollar ahead of trade data in which the Canadian surplus with the US narrowed to C$4.2B from C$5.1B.


    The Aussie dollar fell for the fifth straight day. Impacts from the Australian brush fires are sure to impact the domestic economy with a 0.4% minimum hit to GDP anticipated by AMP’s investment strategist Shane Oliver. The stalled growth could prompt another interest rate cut as early as February.

    China and the US are due to sign Phase I of a trade deal next week in Washington. China has agreed to increase purchases of U.S. farm products – exact figures were not disclosed.

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Kathryn Garvey
Kathryn Garvey

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