The firing of Iranian missiles at US forces in Iraq immediately escalated tensions in the ME, rallying gold oil & safe-haven currencies. There has been no immediate military response from the US and the President said he would be making statement this morning. The lack of US response gave the market the perception that both sides do not wish a further escalation of tensions. Yen which initially tested its 3 months vs US$, later retreated alongside other safe-haven commodities. Tuesdays stronger-than-expected US ISM Non-Manufacturing PMI gave investor’s confidence in US$. Investors will be watching US ADP Employment change to provide similar growth signals for the US. The primary focus this morning will be the US Presidents speech and his response to the Iranian attack.
Oil initially tested fresh four month highs on the missile attack news, but prices retreated as tensions appear to ease. C$ is stable around the 1.3000 level awaiting to see how the ME tensions unfold. C$ should remain firm vs US$ as oil prices remain high. This week investors will focus on the BOC Governor speech on Thursday and Canadian Jobs data it out on Friday.
Middle east tensions and weak German factory orders which dropped to 1.3% which put additional pressure on Euro. Intraday US data release this morning and US response to the Iranian attack will dictate market direction. Expect 1.1060 to provide support for Euro on any further weakness vs US$.
Another volatile day for GBP retreating from its highs yesterday on strong US data and the Iranian missile attack. Brexit is also back in the spot light with resumption of Parliament and fresh EU trade discussions. The EU Commission President is set to speak at the London School of Economics which will likely set out her vision for future UK-EU relations. The primary focus this morning will be US Presidents response to the Iranian attack. 1.3000 is starting to form a strong base for GBP vs US$.