Monday’s trading session witnessed increased demand for the safe-havens such as the Japanese Yen and Gold amid escalating geopolitical tensions concerning the Libyan capital, Tripoli. The higher-yielding Asian equities, Treasury yields, and the US equity futures gave up early gains and turned south amid souring risk appetite.
USD/JPY failed once again near 3-week tops and dropped sharply to 111.30. However, the losses remained cushioned by a broad-based rally across the commodities and the US-China trade optimism. Among the European currencies, both the Euro and the British Pound attempted a bounce amid a broadly weaker US dollar, as markets took profits on the recent USD rally following Friday’s upbeat NFP data and ahead of the FOMC minutes release due later in the week ahead.
Markets look forward to a data-light start to a big week ahead, as Monday’s macro calendar offers a batch of second-liner economic releases from both sides of the Atlantic. In early European trading, traders saw the release of the German trade and current account data at 06:00 GMT and will be followed by the Eurozone Sentix Investor Confidence numbers slated for release at 08:30 GMT. In the NA session, the US factory orders will drop in at 14:00 GMT and are expected to drop by 0.6% m/m in February vs. +0.1% last.
Oil prices rose to their highest level since November 2018 on Monday, driven upwards by Libyan political unrest, OPEC's ongoing supply cuts and U.S. sanctions against Iran and Venezuela.
Gold extends its move towards the $1,300 mark, as prices are influenced by the risk-off action on the global stocks and USD price-action. The US intervention and the UN’s restraint on the Libyan geopolitical tensions intensified risk-off moods, boosting the safe-haven demand for gold at the expense of the risk assets such as equities and Treasury yields.