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Global markets on edge as tensions rise in the Middle East

AUD - Australian Dollar

The Australian dollar extended losses on Monday as a risk off mood in global markets was maintained to start the week. Tensions escalated on the weekend between the United States and Iran as the local currency opened at 0.6954 on Monday morning. Overnight lows were seen at 0.6926 despite a slightly higher reading for the AIG manufacturing index and remains in contraction mode.

The Australian dollar opens this morning at 0.6940 ahead of ANZ Job advertisements due for release at 11:30 am AEST. We expect support levels to hold on moves approaching 0.6900, while any upward push will likely meet resistance at 0.6980.

Key Movers

Safe haven assets were the best performers overnight as investors bought back into Gold following escalating tensions in the Middle East. Gold hit a fresh six year high to $1,588 an ounce and the CHF/USD climbed 0.4% higher on the day. The US Dollar Index (DXTY) was 0.25% lower as it struggles to push through the 97.00 barrier.

One of the key movers overnight was the Great British pound rising 0.72% against the greenback as investors will be watching the return of Parliament tomorrow following the festive season break. Sterling will be driven again by Brexit agreement discussions and EU trade talks as it is all but expected that UK’s withdrawal agreements will be signed off by parliament later this month.

Trade Balance and Non-Manufacturing PMI in the United States slated for release this evening is the key agenda items of note.

Expected Ranges

AUD/USD: 0.6900 - 0.6980 ▼

GBP/AUD: 1.8800 - 1.9200 ▲

AUD/NZD: 1.0370 - 1.0440 ▼

AUD/EUR: 0.6170 - 0.6230 ▼

AUD/CAD: 0.8950 - 0.9050 ▼