The Week in Focus: Brexit, Impeachment Less Obvious as Risk Aversion Takes the Front Row

The Week in Focus: Brexit, Impeachment Less Obvious as Risk Aversion Takes the Front Row

After the yuletide season and the absence of insights to give guidance, we can consider some to be moves as volumes come back to typical levels. It is seven days full of the monetary schedule, with 51 details to watch. In the earlier week, just 27 details were in the center.

Risk aversion is the dominant theme today, with deep sell-offs in global stock markets. Treasury yields fell, while gold and oil prices rose. Sentiments were rocked by the sudden escalation of tensions in the Middle East after the US military killed Qasim Soleimani, commander of the Iranian Revolutionary Guards – Quds Force. In the FX markets, the yen and the dollar are the most powerful in the market. The Australian and New Zealand dollars are the weakest, however, the euro and sterling are not extremely far away.

A break of the GBP/USD at 1.3105 demonstrates that the recovery from 1.2905 was finished at 1.3284. The following trial of 1.2905 can be seen. The GBP/JPY remedial decrease should continue from 147.95 to 139.77 level. The AUD/USD pair ruptured the opposition level at 0.6938, yet it might proceed underneath that up till this point. This will be the focal point of the remainder of the session. A solid break will be an early indication of a bearish inversion in the close to term.

In other markets, the DOW is currently down -270 points. In Europe, the FTSE fell -0.28%. The DAX fell -1.69%. The CAC fell -0.43%. The yield on German ten-year bonds fell to -0.060 at -0.280. Earlier in Asia, Japan was on vacation. Hong Kong’s HSI fell -0.32%. China Shanghai SSE fell -0.05%. The Strait of Singapore fell -0.41%.

Market Fundamentals Starting January 6
US President Trump seized Twitter to respond to the threat of Iranian retaliation, threatening to respond “quickly and hard” to any threat.

UK Prime Minister Johnson and European Union Commission President Ursula von der Leyen is meeting this week in the United Kingdom. The speculation is that they will start discussing the relationship after Britain’s exit from the European Union.

At the end of the week, the Chinese national bank expressed that it will keep its money related approach judicious, adaptable and suitable, and will keep on extending monetary reforms, repeating its notable position.

The US dollar closed the week with modest gains against the higher-yielding currencies, as the dismal ISM manufacturing PMI, which fell to its lowest in more than a decade, stopped the rise caused by risk aversion.

Safe-haven assets rose with gold at the highest level in 6 years, and USD / JPY reached its lowest level in two months.

Crude oil prices jumped with tensions between the United States and Iran and traded at their highest levels since April 2019.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.