STO世透国际：US Attacks on Syria Spike Commodity Prices

Our prop desk is currently picking up some long EUR/USD positions as well as short AUD/USD. A short oil position was closed out at a loss overnight, although there may be a reluctance to build further positions ahead of the non-farm payrolls.

Daily Round up

The first Friday of a new trading month typically brings with it the volatility off the back of the US non-farm payrolls, but this could well be overshadowed by the current geopolitical agenda. We’ve seen the US launch missiles against the Syrian military, Russia would be expected to make at least a verbal statement in response to this, and we also have the on going summit between US and Chinese leaders that could produce some additional direction in the near term.

Fundamental Analysis- US Attacks on Syria Spike Commodity Prices

Gold prices spiked higher overnight in the wake of news that the US had launched a barrage of missiles at the Syrian air base that was alleged to have been the source of the chemical weapons strike from earlier in the week. So far, this single strike has been the extent of international reaction to the situation, although with Russia seen as siding with the current Syrian regime, further developments regarding this situation over the coming days and weeks will be closely followed. We could yet see further price reaction for the precious metal.

Oil followed a similar pattern, with US front month contracts moving higher off the back of the news of the missile launch. Although we’ve seen a modest retreat from overnight highs above $53/barrel, with unrest in the Middle East having the clear potential to further disrupt oil flows, there’s little to suggest we’ll see a quick return to the sub-$50 levels that dominated March’s trade.

There’s a flurry of data due for release from London at 8.30am GMT this morning, including the trade balance print and manufacturing production for February. The latter number is expected to show a return to positive territory, although critically markets don’t seem to be responding to the generally upbeat data we’re seeing from the UK of late. The Bank of England is however playing it cool when it comes to the discussion of managing inflationary pressures with monetary policy, so with Mark Carney due to speak at 9am GMT, any shift in his stance here could prove more influential for the pound’s fortunes than the numbers themselves.

At 12.30pm GMT we have the release of the US non-farm payroll figures for March and there’s little reason why these shouldn’t deliver the usual bout of volatility. Expectations are for a slightly slower rate of new jobs being added than we saw last month, but it’s likely to show that the US economy remains in good health. Last night’s missile strike on Syria has had little lasting bearing on US equity index futures, so again anything that plays up the idea of a more hawkish stance from the Fed could see profits being booked rather quickly here.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.