Forexlive Americas FX news wrap: Geopolitical tensions ease and "risk on" returns
Forex news for NY trading on January 8, 2020
- Major indices close higher but late selling sends indices lower on Baghdad bomb chatter
- World Bank cuts global growth forecasts for 2019 and 2020
- US House will move forward with bill to limit Trump's powers on Iran
- Several rockets reported to have hit inside Baghdad Green Zone
- December 2019 non-farm payrolls preview: By the numbers
- US November consumer credit +$12.513 vs +$16.0B expected
- Crude oil futures settle at $59.61
- The US treasury auctions off $24 billion of 10 year notes at 1.869%
- European shares end the session with gains
- WTI crude falls below $60 in fall after Trump's speech in huge turnaround
- Trump: Iran appears to be standing down, which is a good thing
- Boris Johnson underlined urgent need for de-escalation in call with Trump
- US weekly crude oil inventories +1164K vs -3250K expected
- Iran believed to have deliberately sought to avoid US military casualties in strikes - report
- How could oil be lower today? Here's how
- The NZD is the strongest and the EUR is the weakest as NA trader enter for the day
- December ADP employment +202K vs +160K expected
What a day!
A little less than 24 hours ago, the markets got moving after reports of a bombing of a US base in Iraq hit the newswires. Stocks moved sharply lower. US yields also moved lower. Gold prices soared as did crude oil.
In the forex market, at 7:56 PM ET/0056 GMT, a snapshot of the forex market showed the JPY and CHF as the flight to safety currencies. The NZD and the AUD were the weakest. This is how the snapshot of the percentage changes and rankings looked just before 8 PM ET last night.
Nearly 21 or so hours later the strongest to weakest ranking was literally turned completely around.
Instead of being the weakest, the NZD and the AUD are ending the day as the strongest of the majors. Instead of being the strongest , the JPY is ending the day as the the weakest (the EUR and CHF were also weaker - see the end of day rankings below).
What was the catalyst?
- The old saying that "Almost is only good in horseshoes and hand grenades" proved not to be true. The bombings of the US base were "almost", but was not a direct hit (or close to it). In addition, there were no US casualties which was the real "llne in the sand" that could have lea to a counterattack by Pres. Trump. So "almost" was not good enough for a retaliatory strike, and that helped to reverse the currency trends. It was also speculated that "almost" was the intention of Iran as a way to appease the locals, but not to the point of escalating war tensions.
- President Trump in the NY session addressed the US people (and really the world including Iran) and announced that the US would increase sanctions against Iran. He vowed that Iran will never be allowed to have a nuclear weapon. He reiterated that Soleimani was a terrorist and was planning planning other attacks. He asked NATO to get more involved in the Middle East. He saidthat the US did not need Middle East oil anymore, and finally that the US had rebuilt the defense system to a point that it is all there to use, but warned against provoking an attack. He also did say that the United States is ready to embrace peace with all who seek it.
- spot gold $-18.40 or -1.17% to $1555.90. The high price reached $1611.42
- WTI crude oil futures are trading down $2.83 or -4.51% to $59.87. The high price reached $65.65
- Dow closed up 161.41 points or 0.56% at 28745.09
- S&P closed up 15.87 points or 0.49% at 3253.05
- NASDAQ index faired the best with a 60.66 point gain or 0.67% and 9129.24