Become a client

Currency Market Analysis

Jan 07, 2020 | Currency Market Analysis

Global Themes

USD, JPY weaken as Iran tensions ease

The USD was weaker as key global markets bounced back from Friday’s geopolitical losses.

Global markets were weaker on Friday after a US drone strike on an Iranian military leader sparked fears of an escalation in the volatile Middle East.

However, shares bounded back overnight, with the US’s Dow Jones up 0.3% and the Nasdaq up 0.6%.

The safe haven currencies fell with the USDSGD down 0.1% and the JPYSGD down 0.3%.

AUD pressured

The Australian dollar underperformed key global markets overnight as the growing impact of the bushfire crisis makes a local rate cut more likely.

Expectations for a Reserve Bank of Australia rate cut have jumped in recent days with the market probability for a cut on 4 February climbing from 35% to 55% over the last two weeks (source: ASX).

The euro and British pound both gained after better figures from their respective services PMI numbers.

Euro CPI

European data is in focus tonight with the first reading for December’s monthly inflation figures.

Any drift higher in inflation might support the euro after a strong month for the European currency.

Get the daily currency market analysis in your Inbox

Published five days a week, this newsletter provides day-to-day trends and activities affecting the market in easy-to-understand snapshots.