Iran Retaliates With Missile Attack

USD Recovers

The US dollar has been on a stronger footing again today. Following a small retracement lower in the index overnight, price is now trading back up to yesterday’s highs, printing 96.73 last. A stronger than expected ISM non-manufacturing reading has helped boost the dollar along with news that the US trade deficit shrank to its lowest level in three years last month.

EUR Lower On Data Miss

EURUSD has been weaker today in light of the rally in USD. Eurozone flash CPI was in line with expectations yesterday at 1.3% though with German factory orders, release today, seen down again last month, EURUSD is trading lower. Price is currently testing the 1.1124 level support.

GBP Holds The Line

GBPUSD is currently flat on the session following the European open. Despite the rally in USD, positive expectations around Brexit are helping keep GBP underpinned at current levels. MPs are currently performing final scrutiny on the PM’s Withdrawal Agreement Bill which is expected to be passed this week. GBPUSD trades 1.3149 last.

Risk Assets Recover

Risk assets have been a little firmer today, recovering from a sharp drop in equities yesterday in response to news that Iran fired ballistic missiles as a US army base in Iraq. The SPX500 shed around 40 points in response to the news though has since recovered to trade back up to 3230s last.

Safe Havens Weaker Following Risk Recovery

Safe havens have been weaker today, following the recovery in risk assets which saw both JPY and gold pulling back from fresh highs. USDJPY trades 108.45 last, having pierced below the 107.89 level in response to news of the Iranian attack. XAUUSD trades 1583.09 last, down from overnight highs of 1611.39.

Oil Backs Off Highs

Oil prices were sharply higher overnight in response to news of the Iranian attack on a US army base in Iraq. Crude prices jumped to highs of 65.44 overnight, before falling back to 62.78 last. Yesterday, the API reported a further, massive drawdown in US crude stores of 6 million barrels. Traders are now waiting on the headline EIA report later today which could see oil higher again if a drawdown is confirmed.

Loonie Recovering

USDCAD has been higher today, supported by the rally in USD and the pullback in crude. USDCAD trades 1.3009 last as the recovery off the 1.2952 level continues. Canadian employment data later in the week will be the main domestic data focus along with the US employment reports.

Aussie Under Pressure

AUDUSD has been a little weaker today, despite the pickup in risk assets, as the recovery in USD weighs. AUDUSD trades .6866 last. The Aussie has been under pressure this week due to building expectations of an RBA rate cut at the bank’s February meeting.