HomeContributorsFundamental AnalysisSterling Slips after London Attacks; Oil Surges on Tensions in the Gulf

Sterling Slips after London Attacks; Oil Surges on Tensions in the Gulf

The dollar hovered near seven-month lows against the yen following Friday’s disappointing US jobs report, while sterling weakened after the news of the attacks in London over the weekend. Gold hit its highest in over six week and oil was lifted due to tensions in the Middle East.

The greenback held onto losses made on Friday after the release of the non-farm payrolls report which showed fewer jobs were added to the US economy in May, while the previous two months’ figures were revised lower. Despite the unemployment rate falling to a 16-year low of 4.3%, payrolls rose by only 138,000 jobs last month versus the 185,000 forecasted.

The dollar reacted negatively to the data and tumbled to a new seven-month low against the yen in Asian trading today. The pair fell to 110.30 yen before rebounding later in the session. The dollar index dropped to its lowest level since November after the report on Friday and remained below 97 points in Asia, as the softer jobs data diminished prospects of a total of three rate hikes this year by the Federal Reserve, as was originally expected by the markets.

Political uncertainty weighed on the pound after the attacks in London over the weekend that killed seven people resulted in the temporary suspension of campaigning, just days before the June 8 national elections. Sterling fell as much as 0.3% against the dollar in Asia from Friday’s close, trading down to $1.2855. British Prime Minister Theresa May is expected to resume campaigning today. The vote is expected to be much tighter than previously predicted.

The Australian dollar rebounded after a stronger-than-expected Caixin Chinese services PMI provided a boost, as China is a major trading partner for Australia. The index rose to 52.8 in May compared to 51.5 in April. The aussie jumped to $0.7456 after the data from a low of $0.7421.

Gold prices benefitted from a broadly weaker dollar and hit its strongest since April 21 at $1,281.86 an ounce early in the session.

Oil prices rose on news out of the Gulf overnight. Four Arab countries cut diplomatic ties with Qatar, escalating a crisis that started over its relationship with Iran. WTI crude oil fell in early Monday trading to reach $47.64 a barrel before rising back to the $48 handle. Tensions in the Middle East trumped data out late on Friday that showed a rise in the latest US oil rig count.

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