Safe Havens Surge As Iran Attacks
MarketPulse | Jan 08, 2020 03:33AM ET
h3 Gold hits more than 6-year high/h3
Gold and the Japanese yen saw heavy demand as safe haven assets after it was reported early morning that Iran had attacked a couple of US bases in Iraq. Equities tumbled and the US dollar rose as investors sought safe havens in US Treasuries as well. The US 10-year yield slid almost 7 bps to 1.75%, the lowest since December 3.
Gold prices surged to the highest since March 2013, rising above the 61.8% Fibonacci retracement level of the September 2011 to December 2015 drop at 1,594.08. USD/JPY fell to the lowest in three months amid yen demand.
Gold Monthly Chart
Speculative investors (those included in non-commercial totals) have been positioning for this up-move for the past few weeks, adding to net long position for the three weeks to December 31, according to the latest data from CFTC. Net long positions had been boosted to record highs, according to records going back to 1993.
Trump holds off on addressing the nation
An early report from CNN said that US President Trump would be addressing the nation sometime Tuesday evening, but that has since been pushed back to tomorrow morning, according to the President’s tweet. A US official confirmed that Iran had fired 15 rockets and missed four targets, commenting that there were “very few” casualties. Meanwhile Iran’s Foreign Minister said that Iran took and concluded “proportionate” measures to defend itself and is not seeking an escalation in the exchanges.
German factory orders to rebound
Germany’s factory orders probably rose 0.3% m/m in November, according to the latest survey of economists. That’s a smart turnaround from October’s -0.4% and could suggest the Germany economy may be turning the corner. There are also a number of Euro-zone confidence indicators for December due today, and most are expected to show some marginal incremental improvement.
In the US session, we start the run-up to Friday nonfarm payroll report for December with the release of the ADP employment change. That’s expected to jump to +160,000 from +67,000 in November, according to the latest survey.
This improvement runs contrary to the indicator in the most recent ISM manufacturing PMI, which showed a contraction in the employment sub-component to 45.1 from 46.6 the previous month. That was the fifth consecutive month of a contracting bias and was the lowest reading since January 2016. We also can expect a speech from Fed’s Brainard.
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