Forex news from the European morning session - 6 January 2020
Headlines:
- Eurozone January Sentix investor confidence 7.6 vs 2.6 expected
- UK December final services PMI 50.0 vs 49.0 prelim
- Eurozone December final services PMI 52.8 vs 52.4 prelim
- Germany December final services PMI 52.9 vs 52.0 prelim
- France December final services PMI 52.4 vs 52.4 prelim
- Italy December services PMI 51.1 vs 50.9 expected
- Spain December services PMI 54.9 vs 53.9 expected
- China reportedly plans to send delegation to US for 15 January trade deal signing
- Germany November retail sales +2.1% vs +1.0% m/m expected
- Germany's Maas: Germany, France, UK will discuss on Iran nuclear deal today
- US House speaker says will introduce resolution to limit Trump's military actions regarding Iran
Markets:
- GBP leads, USD lags on the day
- European equities lower; E-minis down 0.6%
- US 10-year yields flat at 1.788%
- Gold up 1.7% to $1,579.00
- WTI up 1.3% to $63.87
- Bitcoin up 3.7% to $7,540
Markets continue to be gripped by US-Iran tensions in the Middle East, resulting in more risk aversion as we get the week underway. As a result, gold and oil are among the major beneficiaries with the former trading near seven-year highs close to $1,580.
Equities stay pressured as bonds flip flopped a little during the session, paring early gains before advancing and then now easing up a little once again as yields inch a little higher.
Major currencies were less enthused by US-Iran tensions and focused on economic data instead. An upwards revision to German services PMI helped the euro to gain some ground before pushing its advance as the pound also benefited from a revised UK services PMI.
EUR/USD rose from 1.1165 to 1.1180 before pushing gains towards 1.1200 as we look towards North American trading. Meanwhile, the pound bounced off its 200-hour moving average from 1.3085 to 1.3125 before extending gains after the UK services PMI release.
Cable rose to a high of 1.3175 as price action moved above its 100-hour moving average as well but gains are a little fleeting for now as price falls back closer to 1.3150.
The franc is also a beneficiary as it gained on the softer risk mood while the loonie kept its advance amid higher oil prices. As bonds hinted at a more mixed mood, the yen did little with USD/JPY mainly pivoting around 108.00 throughout the morning.
Meanwhile, the aussie and kiwi inched a little higher amid some weakness in the dollar as the greenback lost ground to European currencies during the session.
Looking ahead, the major theme in markets is still US-Iran tensions so it's best to continue to pay attention to any responses from Iran or Trump on the current situation.
