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Oil Prices Spike Amid Iran Retaliation as Forex Market Calms

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Oil Prices Spike Amid Iran Retaliation as Forex Market Calms
  • Crude oil prices remain at a high after Iranian missile attack
  • USD forex trading markets have generally regained stability
  • Markets remain poised for Presidential statement on Wednesday

The beginning of 2020 has seen a speedy escalation of geopolitical tensions between the U.S and Iran. Marked by the assassination of miltary leader Qasem Soleimani on January 3rd by the United States in Iraq, the latest twist in the tale just hours ago has seen Iranian retaliation. This has come in the form of a targeted attack on 2 air bases in Iraq which are home to American troops. This briefly rocked the USD forex market and has impacted global oil prices significantly.

Surge in oil prices to record highs

During early trading, the prices of crude oil increased sharply to around the $69 mark at the time of writing. This represents their highest point in more than six-months and should be widely expected given the importance of the region when it comes to the global oil industry and markets.

The fear within markets is that one of the busiest oil shipping passages in the world, the Strait of Hormuz, could be disrupted if the current situation between the two nations continues to deteriorate. Market uncertainty is also not helped by the fact that the next moves of the U.S. in relation to today’s missile strike remain unknown.

USD/JPY and forex market beginning to regain composure 

The global forex market also felt reverberations from the Iranian retaliation earlier today. In particular the safe-haven status of the Japanese Yen, well-known among forex margin traders, rang true yet again as many engaged in a flood of risk aversion trading in the immediate aftermath of the missile attack. This led the pair to trade at 3-month lows below 108.00.

At the present moment, traders appear to have calmed and this market has returned to the mid-108 range. The gold market, another safe-haven favorite, has also dropped back slightly but is still holding on to some of it’s gains from earlier in the day. Major forex currency pairs and indices from around the world are also licking their wounds and making a slow recovery during the early trading across Europe. The Euro, British Pound, and Swiss Franc have all found their composure and return to a somewhat normal trading range for the day.

Next moves awaited with anticipation around the world

Many commentators have referred to this as the biggest outside threat and test of President Trump’s reign to date. The fact that no immediate announcement was made in haste, may have done something to help the global markets return to calmer waters.

With the promise of a Wednesday morning US Eastern Time announcement to address the crisis though, is sure to bring with it another rollercoaster day and an amount of uncertainty moving toward the weekend. Considering the current climate and decision making process, there is no educated way to guess how that announcement may play out and what it will bring for the forex market and the nation.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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EUR/USD Making a Recovery in the Daily Forex Market

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EUR/USD Making a Recovery in the Daily Forex Market
  • EUR/USD Price Continues to Improve on Market Open
  • Traders Cashing in on Gold Gains
  • Coronavirus Still Impacting Market Sentiment

 

The EUR/USD forex market has continued to improve slowly but surely over the last few trading sessions. As the European session opened today it still managed to cling onto the gains of the previous few days. This comes despite the worsening situation in Italy where the coronavirus outbreak is playing havoc with one of the largest economies in the EU. This latest news threatens to plunge the country back into a recession from which they only recently emerged.

US Dollar to Continue as Beneficiary

As markets in Europe await the release of German GDP data and consumer confidence data from the US later in the day, the Dollar stands in a unique position. With Europe and most of Asia consumed with health concern, the currency looks set to continue in its safe haven role. This has come to look even more certain with the rollercoaster that European traders endured through Monday trading.

Even though the American stock market has been in a turbulent mood, particularly yesterday, it is the currency that will continue to hold up as a safe option for traders looking to weather out the storm. The CB consumer confidence data to come today to come today will also go a long way to steadying the ship on Wall Street if it comes out more positive than expected.

Gold Prices Start to Consolidate

The USD was not the only market to see a boost from the ongoing situation. Gold has always been perhaps the number one safe-haven in times of market uncertainty. This was proven again in recent days with the price taking off to new highs. This has begun to consolidate today as traders have decided on taking some profits. This has seen the price retreat marginally from the seven year high reached on Monday.

The commodity still remains around the $1650 mark, though barring any catastrophic news from Europe in particular today, many analysts feel this is likely to see another slight decline to the nearby resistance levels. This too will depend a lot on the morning data from the US market as well as the final German GDP numbers to come.

Looking Ahead

In the current market and general economic climate, it seems that the only certain thing, is more uncertainty. Much will rely again on geopolitical factors more than economic data in what is a relative sparse week on the economic calendar. This could be a positive in the sense the forex market will have some space to contend with whatever news comes without much additional worry from economic data.

Besides data releases from German, Australia, and Canada to come throughout the week, a particular focal point given the current Eurozone issues may be Wednesdays address from the President of the ECB, Christine Lagarde.

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Asian Economy and Forex Market Crippled by Virus Spread

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Asian Economy and Forex Market Crippled by Virus Spread
  • Japanese Yen in critical struggle
  • South Korean exports also slump
  • USD safe haven the preference for most

As the week began, many had thought and hoped that the ongoing battled waged in China against the Coronavirus was beginning to settle down. Markets continued to operate with no major downturn as Beijing appeared to be controlling the situation well. The economic situation in China sees no major change, but that of its neighbors in the Asia Pacific region has been turned upside down as we near the weekend. Two deaths in Japan and a surge in cases from neighboring Korea have suddenly thrown the region into a very difficult economic position.

Japanese Yen and Economy Fighting a Battle

Typically a renowned safe haven in times of trouble, the Japanese Yen has endured its worst 4-day run in more than 2 years. The currency which is usually notoriously stable, has shed more than 2% in this short period. Prior to a slight rebound in today’s market trading, a sense of panic could be felt among traders. This fall is of course related to the current situation and compounded by how the virus has hit both trade and tourism.

Fears of a recession are high, with even David Bloom the head of FX at HSBC commenting that “New Coronavirus cases in Korea and Japan have given people cold feet regarding Japan and the Yen as a safe haven”. This certainly appears at least for the moment, to be true.

South Korea another Victim

The most notable spike in virus cases within recent days has come from South Korea. Cases there have almost doubled in just a 24 hour period. This, alongside comments from the director general of the WHO about how cases could see a further sharp increase have seen Korean markets down almost 1.5% overnight.

Traders and the wider public will certainly hope that the director generals words do not ring true, although the country have already noted a severe drop off in exports to China for February thanks to the disruption of supply chains. South Korea can play a key linking role in the region and so, it is no surprise to see the market react in such a way with the surge.

USD the Choice for Many in an Uncertain Market

With confidence low in the JPY ability to act as a safe haven at the moment, the USD has gained some strength in this regard. The currency has continued to trade steadily in a positive manner throughout the crisis as traders put their faith in the greenback.

This trend is expected to continue at least until the virus fears begin to subside. Quite when that will be though, and what damage will have been done to the world’s economy by that time, few can estimate.

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GBP/USD Forex Market Back Above Key Level

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GBP/USD Forex Market Back Above Key Level
  • Market jumps back above important 1.30 figure after shaky start
  • Pound buoyed by positive CPI
  • No Deal Brexit and China fears still holding traders


The GBP/USD has begun to climb again after a protracted period of uncertainty which has seen it hover around a key benchmark area. 1.30 has been a sticking point for the market over recent days and weeks. This is no surprise given the level of uncertainty that has plagued the geopolitical scene of late. A turbulent Brexit was finally brought to pass, this though is far from done with many of the key negotiations still to come before the end of 2020.

USD Silence Helps the Climb Back

The currency pair is in fact reversing the previous day’s session that saw it close below this key point. It is doing so with the help of a very quiet USD currency and market. This could be related to the news earlier in the week of a revenue warning from Apple. With the DOW Jones, and NASDAQ also down, it is possible that traders are giving the market a slightly wide berth for now and waiting for some more positive news on the global stage.

Consumer Price Index Boost for GBP

The strength of the Pound in this pair can be somewhat attributed to the recent release of economic figures more than the current and ongoing post-Brexit negotiations. Both the CPI (Consumer Price Index), and PPI (Producer Price Index) which measure how price rises and inflation impact both parties, came in stronger than expected.

While this may not spell great news for British consumers at the checkout with inflation reaching a high point, it has given the currency a boost. This number may show that UK production and consumer spending have been very healthy in real terms.

The British CPI managed to jump 1.8% in its year-on-year number for January. This is steadily more than the 1.3% rise of the previous year and again more than the 1.6% expected. All in all, a potential rise in consumer confidence may be garnered from these figures.

Still Worries on the Horizon

Despite the positive movements of the day, there are still challenging points for the pair, and the wider economy to deal with. On a somewhat domestic level, the ongoing negotiations about the future UK relationship with the EU are set to drag on. Latest headlines today show that the UK remain committed to a points-based entry system that will severely limit opportunities to unskilled worked from outside the country.

Finally, in China, there is still the ongoing issue of the Coronavirus. Catching few headlines but the virus is still serving to restrict operations of companies within China and overseas. This widespread supply chain disruption is seen to be behind the Apple revenue warning and the fall of both the DOW and the NASDAQ which is heavily reliant on the Chinese market.

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