World markets looked to have overcome their new year wobbles, as the US-Iran situation eases by backing away from conflict in the Middle East.
Trump and Iranian officials looked to defuse a crisis that on Wednesday had threatened to spiral into open conflict. The tit-for-tat military action had raised global concerns that the Middle East was heading towards another war.
Iran fired missiles at military bases housing U.S. troops in Iraq on Wednesday in retaliation for a U.S. drone strike that killed a top Iranian general. But in an address on Wednesday, Trump U.S. President Donald Trump responded to the Iranian attack on U.S. forces with sanctions, not violence. However, he did not specify the kind of economic sanctions.
Iranian Foreign Minister Mohammad Javad Zarif had earlier said the strikes “concluded” Tehran’s response to the killing of its general, Qassem Soleimani.
Markets resumed a more risk-taking approach on hopes of a U.S.-China trade deal. Investors think the deal will clear one of the world economy’s biggest uncertainties and help boost global growth this year.
Traders will also be watching U.S. jobless claims, which economists expect inched down to 220,000 in the week to Jan. 4 from 222,000.
START TRADINGForex – Markets breath sigh of relief as US-Iran situation eases
Focus is expected to shift back to the global economy, with expectations that the Phase 1 trade deal will be signed next week providing underlying support for risk assets.
The US dollar, also seen as a safe choice to park money in times of turmoil, fell against other major currencies. It was trading at $1.1110 against the euro.
The Japanese yen considered a safe haven during geopolitical turmoil because of its deep liquidity continued to reverse its 2020 gains in European trading. It was last down 0.3% at 109.49 to the dollar, its lowest in a week and a half.
The Swiss franc also gave up early gains and also fell against both the dollar and the euro.
Brexit-bound sterling took a dip to $1.3028, its lowest level since Dec. 27. Bank of England Governor said it could provide a “relatively prompt response” if the UK economy looked like it was facing prolonged weakness. Sterling was last down 0.5% at $1.3028, its lowest level since Dec. 27 and also fell against the euro 0.6% at 85.27 pence.
Oil is cheaper than it was before the killing of Qassem Soleimani, a strike that raised fears of an escalating regional conflict. As the US-Iran situation eased Brent futures prices steadied at $65.41 per barrel, about where they began the year.
Gold prices also slid, retreating further from a near-seven-year peak scaled in the previous session. Goldfell to $1,545 per ounce but the precious metal remained more expensive than it was before Soleimani’s death.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money