Haven demand surges after US Defense Department states a strike in Baghdad killed Iranian general Qassem Solimani
Statement from the US Defense Department regarding the airstrike that killed top Iranian commander Qassem Solimani pushed markets to risk-off sentiment. This news comes at a time when the risk sentiment is already fragile as investors evaluate other geopolitical situations including the US-China trade negotiations and Brexit. Iran has threatened “severe retaliation” which has supported haven trades.
January 3, 2020
EUR/USD 1.1150 GBP/USD 1.3076 USD/CAD 1.2985 AUD/USD 0.6949 USD/JPY 108.17 USD/CNH 6.9643 USD/ILS 3.4762 USD/MXN 18.9112 USD/CHF 0.9727 USD/INR 71.7988
USDThe US dollar is stronger against its peers aside from the yen on the news out of Iran. Focus will be on US economic data due later today (ISM manufacturing) and minutes from the Fed’s December meeting.GBPSterling extended losses trading below 1.3100 and wiping out 1.4% of gains from earlier this week. Data out of the UK showed that construction PMI contracted for the eighth month, the longest period since the financial crisis. Weak data could push the Bank of England to cut rates, money markets are pricing in a 16bp cut to rates by the end of 2020.EUR
EUR/USD is set for a weekly decline falling about 0.3%. The currency pair continues to trade below 1.1200.CADThe loonie remains largely unchanged against the US dollar as support from the rally in crude oil offsets the safe havens play for US dollar purchases. Crude oil has rallied 3.7% on news of tensions between Iran and the US. Later today Senior Deputy Governor of the Bank of Canada, Carolyn Wilkins, will speak on a panel to discuss Women in Central Banking.ASIA/PACIFIC
The Japanese yen strengthened to a two-month high vs the US dollar as the market shifted to risk-off sentiment following news of a US airstrike killing a top Iranian commander. Both AUD/USD and NZD/USD are down almost 1%, trading around 0.6950 and 0.6660 respectively.