Get 40% Off
🎁 Free Gift Friday: Copy Legendary Investors' Portfolios in One ClickCopy for Free

FOREX-Dollar stumbles to 9-wk low against safe-haven yen as Mideast tensions flare

Published 03/01/2020, 01:39 pm
Updated 03/01/2020, 01:42 pm
© Reuters.  FOREX-Dollar stumbles to 9-wk low against safe-haven yen as Mideast tensions flare

* Dollar index edges away from 6-mth lows, but eases on yen

* Eyes on U.S. factory survey after poor UK, EU results

* Asia markets orderly on anniversary of 'flash crash'

By Wayne Cole

SYDNEY, Jan 3 (Reuters) - The Japanese yen led other safe-haven assets higher on Friday after air strikes on Baghdad airport killed a senior Iranian military official, stoking tensions in the Middle East and lifting the price of oil.

U.S. Treasury bonds and gold rallied after an Iraqi militia spokesman told Reuters that Iranian Major-General Qassem Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis were killed in the attack. officials told Reuters that strikes had been carried out against two targets linked to Iran in Baghdad. Oil prices jumped $2 a barrel. O/R

The dollar eased 0.46% to 108.07 yen JPY= following the news, breaching several layers of chart support and reaching its lowest since early November. The euro also dipped to a three-week low at 120.78 yen EURJPY= .

The yen is often used as a safe harbour during times of global tensions given Japan's status as the world's largest creditor nation. A holiday in Tokyo also made for thin conditions, exaggerating the move.

The holiday meant cash Treasuries were not trading yet, but Treasury bond futures gained 7 ticks on the news TYc1 implying a drop in U.S. yields.

Against a basket of currencies, the dollar slipped 0.1% to 96.732 .DXY but stayed above the recent six-month low around 96.355.

The dollar had got a lift overnight when dismal economic news from Europe and the UK weighed on the pound and euro.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Surveys showed British factory output fell in December at the fastest rate since 2012, while the German manufacturing sector stayed deep in contraction. pound was flat at $1.3140 GBP= , after easing from a top of $1.3266 on Thursday. The euro stood at $1.1174 EUR= , after backing away from major chart resistance around $1.1249.

An index of U.S. manufacturing activity due later is expected to show a slight uptick to 49.0 in December, from 48.1 the month before.

Figures out Thursday showed jobless claims edged lower last week in a positive signal for the U.S. labour market. resilience of employment is a major reason the Federal Reserve has signalled no more rate cuts will be needed in this cycle, leading markets to sharply scale back expectations of further policy easing FEDWATCH .

Several Fed official are speaking on Friday including Governor Lael Brainard and the heads of the San Francisco, Chicago, Richmond and Dallas banks.

Analysts expect they will remain upbeat on the economic outlook and reiterate a steady outlook for rates.

The dollar had benefited from U.S. economic outperformance for much of 2019, though the recent easing in Sino-U.S. trade concerns has boosted optimism that this year could favour other major nations.

So far on Friday, there had been no repeat of the "flash crash" of Jan. 3 last year when massive stop-loss selling swept through an illiquid holiday-hit market.

Regulators have been on alert for any signs of strain and trade was thin but orderly.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.