Oil prices came under fresh pressure today as international sanctions on Iran were lifted, paving the way for Iranian oil exports. WTI and Brent crude futures slumped below $29 a barrel for the first time since 2003. US crude contracts were last trading at $28.80 a barrel, having earlier touched a low of $28.35. Stock markets in the Middle East and in Asia fell sharply in response to the latest plunge in oil prices.
Safe haven currencies such as the Japanese yen continued to benefit from the current risk-off sentiment but the yen was off highs from earlier in Asian session. The US dollar fell to its lowest level since August 2015, touching 116.50 yen before rebounding to 117.06 yen in late Asian trading. The euro was down at 127.37 yen, while the pound was near two-year lows at 166.83 yen.
Upwardly revised industrial production figures from Japan added to the yen’s appeal. The final reading for industrial production in November was revised slightly higher to -0.9% month-on-month from -1.0% in the preliminary estimate.
The Bank of Japan’s Governor Haruhiko Kuroda reiterated his outlook on the Japanese economy, which it expects to grow moderately, while stressing that the Bank will continue with its QQE program for as long as necessary until it has achieved its inflation target.
The People’s Bank of China announced new measures on Monday to combat speculation against offshore yuan trading. The PBOC will introduce a reserve requirement ratio for some banks’ offshore domestic deposits. The move is designed to curb offshore speculation, which has been blamed for the recent widening of the spread between the yuan’s onshore and offshore values. Meanwhile, the central bank set a slightly firmer midpoint at 6.5590 yuan per dollar today.
The Australian dollar bounced back from 2009 lows on Monday to climb to 0.6897 against the greenback. The kiwi also moved higher to jump to 0.6468 in late Asian session. Another currency attempting a recovery was the Canadian dollar which firmed to 1.4521 versus the US dollar after hitting a fresh 16-year low of 1.4605 earlier in the session.
In European markets, the euro was weaker at 1.0883 dollars but the pound moved in the opposite direction to climb to 1.4293 dollars.
The rest of the day is expected to be relatively quiet with US markets closed for Martin Luther King Day and no major data coming out of Europe.
Risk Warning: Forex, Commodities, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you fully understand the risks involved and do not invest money you cannot afford to lose. Please refer to our full Risk Disclosure.