The U.S. session was a relatively light one in terms of data, allowing major currencies to hold on to their standing from the earlier session. A bit of risk-taking was evident as gold ticked lower while U.S. equities posted decent gains.
- Canadian banks closed for Civic Day
- U.S. CB employment trend index up from 108.72 to 109.89 in July
- Australia’s AIG construction index improved from 50.6 to 52.0 in July
- U.K. BRC retail sales monitor slumped from 1.1% to 0.5% vs. 1.3% forecast
- Japanese household spending down by 1.2% y/y as expected
- RBA monetary policy decision coming up
Risk appetite extends its stay
After a positive run in the earlier session, crude oil held on to its winnings while precious metals like gold returned some of their safe-haven gains.
- Gold dipped to $1,207.52 per troy ounce (-0.51%)
- WTI crude oil advanced to $68.90 per barrel (+0.62%)
Wall Street was also in a better mood, thanks to the rally in Facebook shares lifting the tech sector.
- Dow 30 index is up 39.60 points to 25,502.18 (+0.16%)
- Nasdaq is up 47.66 points to 7,859.68 (+0.61%)
- S&P 500 index is up 10.05 points to 2,850.40 (+0.35%)
U.S. to reimpose sanctions on Iran
Later in the session, a senior U.S. government official confirmed that they are gearing up to reimpose sanctions on Iran in order to strong-arm them into a new nuclear agreement. Some say that this might also be aimed at spurring a regime change in the country.
Soon after, the Donald signed an executive order to restrict purchases of dollar banknotes by Iran, in effect preventing the nation from trading gold and industrial metals. The measures also target the auto industry, as well as imports of pistachios and Persian carpets to the U.S., and will take effect today.
To top it off, tougher measures on oil and shipping lines are in the works and will take effect in November if Iran does not comply with U.S. demands.
In response, Iranian President Hassan Rouhani said in a televised address that the U.S. owes Iran an apology and needs to lift the sanctions first before negotiations can proceed.
Meanwhile, a joint statement from the foreign ministers of the U.K., Germany, France and the European Union stated:
“We deeply regret the re-imposition of sanctions by the U.S., due to the latter’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA).
Preserving the nuclear deal with Iran is a matter of respecting international agreements and a matter of international security.”
In other words, the remaining parties to the nuclear agreement would keep their financial channels open and continue to import oil and gas from Iran. Apart from that, China is also expected to stay a major buyer of Iranian oil.
Major Market Mover(s):
Despite some risk-on vibes earlier in the session, the Kiwi was forced to cough up some pips as geopolitical tensions came into play.
NZD/USD fell from .6743 to a low of .6724, NZD/JPY continued to slide to a low of 74.93, EUR/NZD popped up to 1.7175, and GBP/NZD pulled up from 1.9218 to a high of 1.9246.
The British pound took a quick breather from its earlier slide, possibly on profit-taking and a shift in attention to other headlines.
GBP/USD held on to the 1.2875 area, GBP/JPY fought to keep its head above the 144.00 mark, GBP/AUD bounced off 1.7500 to a high of 1.7531, and EUR/GBP fell from a high of .8935 to .8923.
The Loonie also managed to snag a few wins despite the absence of Canadian traders enjoying the bank holiday.
USD/CAD inched down from 1.3027 to a low of 1.2992, CAD/JPY found support around 85.50 and pulled up to 85.75 before retreating to 85.62, GBP/CAD continued to slump to 1.6830, and AUD/CAD is down to the .9600 mark.
Watch Out For:
- 4:30 am GMT: RBA monetary policy decision (no rate changes expected)
- 6:00 am GMT: Japanese leading indicators (dip from 106.9% to 105.4% expected)