Senior Analyst

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The week started on the wrong foot for the USD which saw some signs of weakness following the tension between China and US over the naval drone which Chinese navy captured. The negative USD sentiment though was quickly reversed and the Dollar re-gained its composure as it managed to post new highs versus all majors. Given the lack of significant data to be released today, the markets will likely keep a close eye on the development of the Chinese economy which has shown signs of cooling off, as well on the geopolitical tension possibly arising from the assassination of the Russian ambassador in Turkey last night.

Currencies: As expected, the Bank of Japan kept rates unchanged at -0.10% overnight. The JPY has weakened significantly over the last month rising from 101.25 to 117.86 at time of writing. Investors were rattled last night after the Russian ambassador to Turkey was assassinated by an off duty police officer, and further when a truck drove into a busy street in Berlin, killing 12 and injuring many more. The safe haven Swiss Franc hit a 6-month high versus the Euro, while the Turkish Lira dropped to 3.53, but still lower than 3.6 which was the record low set last month. Elsewhere, the EURUSD slipped to 1.0375 earlier this morning, nearing its 1.03665 low, its lowest since January 2003. The GBPUSD dropped to 1.2353, its lowest in a month. Notable loser was also the AUD, which saw its value plummet to 6.5 lows at 0.7240.

Stocks: Despite the terror attacks, stocks in the US closed positive yet for another time. The Dow Jones rose 0.20%, while the S&P 500 gained 0.20%, and the NASDAQ added 0.37%. In Asian, stocks were also higher, with exception being China which was done 0.70%.

Oil and Gold: Oil was neutral to bearish overnight, as investors started taking profits ahead of the end of the year. Analysts expect markets would likely remain slow this week, with no major fundamentals expected that could cause a lot of volatility. Crude oil futures were trading at $52.96 per barrel at 0722 GMT while Brent crude oil futures were down to $54.88 per barrel. GOLD was also under pressure on the back of a strong Dollar and a weakening Chinese economy which is the world’s biggest consumer of metals, amounting to over 50% of global supply. Gold prices were down to $1134 an ounce, down from $1142 yesterday.

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