Markets await China deal, less stress on war

Facebooktwitterlinkedinmail

Markets await China deal, less stress on war

JANUARY 08, 2020

The U.S. Dollar is trading in tight ranges after missile attacks on American military bases in Iraq seem to have left no casualties nor major damage.

Overview

Global markets seem to be taking the news as a sign of possible calming of tensions between Iran and the U.S. as even the government claims it is not seeking an all-out conflict. We are expecting President Trump to make statements later today at 11 AM. Ultimately, the buck is little changed as it continues to recover with the Bloomberg Dollar Spot Index at its best since “Boxing Day.”

Iran also faced a tragedy in the form of a plane crash last night as a flight headed for Ukraine crashed shortly after takeoff. In relation to markets, Boeing engine failure is suspected of being the cause of the accident. Oil prices fell and other commodities followed. In the past, the risk of armed conflict has benefited the dollar. Currently, markets seem to be mostly shrugging off the risk of war as other items gain more focus such as the chances of a trade agreement being signed between China and the U.S. as soon as next week following progress in talks as well as concessions.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro is down 1.0% since the year began with member nations voting on new budgets and data still painting a picture of mostly economic stagnation. Consumer Confidence decreased as expected in December, but there is an uptick in Economic expectations as that confidence reading came in positive. Plans for revamping infrastructure with green technology in mind will be seen as part of recovery from awful deterioration of productivity last year across the region. We do indeed expect the shared currency to rise as the pace of growth improves and contractions go back into expansionary territory.

GBP

The Pound is potentially on the rise as traders hope for improvement in relations and expectations as Boris Johnson meets with European Union Commission President Ursula von der Leyen. Discussions are set to cover specifics regarding the next stage in Brexit. It should be noted that the UK and the EU have a deadline in July to agree to extend the transition period. Sterling is certainly volatile, and we see possible trouble in the next six months as markets weigh the chances of a deal being done by the end of this year. A no-deal Brexit is again on the table, which shall hurt chances for improved Pound value.

Facebooktwitterlinkedinmail