EUR/USDYemen’s Iran-aligned Houthi group claimed responsibility for the attack on Saudi Arabia’s oil and gas facilities in Abqaiq which has suspended half of the kingdom’s processing, corresponding to 6% of world supply. The news benefitted, rather drove some aggressive flows towards traditional safe-haven assets.
EUR/USD is trading steadily below 1.11 despite reports that the US may slap tariffs on the EU due to the latter’s subsidies of Airbus. GBP/USD is retreating from the highs around 1.25 as UK prime minister Boris Johnson heads to Luxembourg to meet European Commission President Jean-Claude Juncker. USD/JPY recovers from daily swing lows, still in the red below 108.00 handle as escalating geopolitical tensions boosts JPY’s perceived safe-haven status.
US yields have been dropping after surging last week. Tension is mounting ahead of the all-important Federal Reserve decision on Wednesday.
No major economic releases are due today, both in the European and the US session, therefor, while market participants continue to adjust to the recently announced package of monetary stimulus by the ECB, the attention should shift to the FOMC gathering, where another 25 bps ‘insurance rate cut’ is almost fully priced in. Additionally, any further deterioration in the global risk sentiment might continue impact the markets.
Oil gapped substantially higher from Friday’s close of $60.22, courtesy of Saturday’s drone attack on Saudi Aramco’s oil facility – one of the world’s most important oil processing plant. Oil prices have soared by nearly 20% and stabilized around 10% higher, with WTI trading near $60.
Gold had spiked to $1,506 from $1,488.75 the low on Saudi Arabia headlines. The yellow metal is currently trading at $1,503.40. However, while the news alone is a blow for risk appetite, gold was already poised to the upside considering the underlying global economic weakness