Frank Walbaum
FX Strategies.Asia
European bourses edged mostly higher this morning taking a cue from their Asian counterparts, as market participants continue to monitor tensions between the U.S. and Iran and amid growing concerns of a military confrontation in the Middle East. U.S. stock index futures were also slightly higher this morning, pointing to a mostly bullish US open later in the afternoon as investors continue to monitor geopolitics.
Geopolitical Tension Take Center Stage
It should be noted that over the weekend, President Trump threatened that the U.S. will impose “major” additional sanctions on Iran. Global markets could wobble as the day progresses, amid broader geopolitical tensions and the US - Iran standoff. However, it is important to note that a US attack on Iran seems unlikely for the time being.
EUR and AUD in the Lead
The euro advanced to a three-month high against the dollar this morning, as the greenback weakened after the Federal Reserve signaled last week it could soon cut interest rates. The EUR/USD was last seen trading 0.08% higher at $1.1375 as of 7:56 GMT. The Australian dollar also surged to a 12-day high this morning after RBA’s Lowe stated that he expects the central bank’s infrastructure investment to benefit the Australian economy. Elsewhere, the GBP is also set to strengthen this week on the back of strong EUR and UK political developments. Currently, the seat of the next UK PM remains uncertain some uncertainty with current favorite Johnson under major scrutiny after police visits to his home and alleged ties with far-right former Trump adviser Steve Bannon.
Oil Prices Advance on Simmering US/Iran Tensions
Oil prices climbed on Monday amid simmering tensions between Iran and the United States, with U.S. Secretary of State Mike Pompeo saying “significant” sanctions on Tehran would be announced. West Texas Intermediate crude futures were last up 39 cents, or 0.7%, at $57.83 a barrel as of 8:05 GMT this morning. It should be noted that last week U.S. President Donald Trump called off a military strike to retaliate for Iran’s downing of an unmanned U.S. drone at the very last minute. The bullish oil momentum could continue today if there are any developments on the US/Iran front.
Safe Havens Advance
Gold and silver are currently at extreme levels but could gain further momentum if geopolitical developments continue to spread investor unrest. Spot gold prices hovered near a six-year high touched in the previous session, amid the broader risk-off mood with the noble metal last seen trading 0.2% higher for the day at $1403.04 as of 8:10 GMT.
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