Market Brief: Mideast Tensions Retain Their Grip On Sentiment


A summary of news and snapshot of moves from today’s Asia session.

View our guide on how to interpret the FX Dashboard

FX Brief:

  • It was gaps galore at market open as tensions in the Middle East escalated over the weekend. The $36 move in gold, re-test of $64 resistance on WTI and gap lower on the S&P futures underscored the negative tone form geopolitics as we kick off the new year.
  • French President Macron spoke with Trump and said Iran should avoid “destabilising” actions. Japan’s PM Abe has called for all parties to avoid escalating tensions in the Middle East.
  • Australian manufacturing PMI contracted for a second consecutive month at 48.3, although slightly above the prior read of 48.1. Japan’s manufacturing read contracted for an eleventh straight month and remains at multi-year lows “with little hope of a turnaround” according to HIS Markit, who compile the survey.
  • NZD and AUD are the weakest majors, CAD and CHF are the strongest. Still, volatility is lower than Friday’s explosive move, although 11 of the 28 pairs we track have met or exceeded their 10-day ATR.

Price Action:

  • AUD/USD and NZD/USD are teasing key support levels near Friday’s low. Whilst this leaves potential for a minor bounce, the bearishness of the declines over Thursday and Friday do suggest we may see another low in due course after a corrective bounce (assuming one is even seen).
  • USD/CAD continues to consolidate between 1.2950 and 1.3015 (the 2019 low). Keep an eye for a breakout either side of the congestion zone as it could pave the way for its next directional move.
  • USD/CHF produced a spinning top doji on Friday. If prices remain beneath Friday’s high (0.9744) then we could assume the correction has ended and for it to revisit the lows. A break above 0.9944 brings 0.9440 into focus and assumes a deeper correction against the dominant, bearish trend.
  • USD/JPY made a minor low today but ultimately remains above 107.88 support. Given it didn’t follow Friday’s move (like gold and WTI did) then it suggests we could be in for a corrective bounce, unless Middle East tensions escalate further.

Equities Brief:

  • A sea of red for major Asian stock markets as we kick start the first full week of trading for 2020. Rising geopolitical risk in the Middle East that has been triggered by the assassination of an Iran top military leader by U.S overshadowed the “feel good” factor from the upcoming U.S-China Phase One trade deal official signed off schedule on 15 Jan in the U.S. White House.
  • U.S. President Trump has “doubled down” his hawkish stance on Iran where he has threatened to target Iranian cultural sites if Tehran retaliates. In addition, Trump has threatened to impose sanctions on Iraq as Iraq’s parliament has voted to expel remaining U.S. troops in Iraq. Meanwhile, Iran government has abandoned limitations on enriching uranium, stoking fears of using nuclear weapons as a form of retaliation against U.S.
  • China Caixin Services PMI for Dec has fallen to 52.5 in Dec from a 7-month high of 53.5 printed in Nov which indicates a slow-down in growth in the services sector. A positive factor to note is the New Orders component where rose the most since Sep on the back of new product offerings.
  • Japan’s manufacturing sector has continued to contract for 8 consecutive months since May 2019. The finalised Jibun Bank Japan Manufacturing PMI for Dec was revised down to 48.4 from an earlier flash estimate of 48.8 and was also lower from Nov finalised data of 48.9.
  • Aside from geopolitical and marco news flows, a mysterious viral pneumonia outbreak has spread in Wuhan, a central Chinese city with a population over 11 million that has led to speculation of a resurgence of the highly contagious Sars virus in 2003 that also triggered a massive sell-off in Asian stocks. Medical experts in China has so far downplayed the fears and stated the viral pneumonia outbreak is not Sars, Mers or bird flu.  

Matt Simpson and Kelvin Wong both contributed to this article

Data from Refinitiv. Index names may not reflect tradable instruments and not all markets are available in all regions.


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.