Attacks on Saudi Oil Fields Temper Risk Appetite
Equity markets fell while the safe-haven assets rose following reports of the drone attacks on Saudi oil fields.
The incident which took place late on Friday saw investors reacting as the markets opened on Monday.
Economic data was spare on the day, with only China reporting the industrial production and retail sales numbers.
Euro Slips on a Stronger Greenback
The euro gave back some of the gains from last week. Economic data from both the eurozone and the US was sparse. The dollar gained as investors rushed to the safe-haven USD in response to the drone attacks on Saudi oil facilities. Investors will be looking to the German ZEW economic sentiment report due later today.
EURUSD Reverses Gains
The currency pair erased some of the gains from last week’s ECB meeting. Price slipped off the support level of 1.1030 to test the dynamic support of the trend line. The pair could now move into a consolidation phase below the support/resistance level. To the downside, the lower support area of 1.0944 – 1.0925 could be tested if the bearish momentum continues.
Sterling Holds Steady Near Two-Month Highs
The pound sterling was muted to the strength of the US dollar. The GBPUSD held steady near Friday’s highs, which marks a two-month high in the currency pair. British Prime Minister Boris Johnson is in Luxembourg meeting with the European Commission President, Jean-Claude Juncker.
GBPUSD Slips a Few Pips Away From Resistance
The currency pair reversed gains, just a few pips off the resistance level of 1.2533 – 1.2511. But following the reversal yesterday, price action is forming a higher low. This could confirm a possible breakout from the resistance area. However, we expect the gains to stall near the resistance level. GBPUSD could, therefore, settle within the range of the said resistance and the lower support of 1.2328.
Gold Rises More Than 1% in Response to Saudi Oil Attacks
The precious metal surged more than one percent on Monday. Gold was reacting to news about the drone attacks on Saudi oil facilities. The news saw investors rushing to safe haven assets in anticipation of rising tensions in the Middle East. In response, Saudi Arabia shut down half of its oil production. US President Trump blamed Iran while Yemen’s Houthi rebels claimed responsibility for the attack.
XAUUSD Fails to Breakout Higher
While gold prices surged at the open, the precious metal failed to close above the resistance level of 1508. Price action held steady within the range over the day. Despite the gap higher, XAUUSD remains within the range and will remain that way in the run-up to Wednesday’s Fed meeting. The bias continues to the upside as gold is likely to form a lower high in the longer-term trend.