Increased tensions in the Middle East pushed oil prices above $43 a barrel today, extending Tuesday’s gains. Geopolitical risks were heightened yesterday after Turkey downed a Russian fighter jet over the Syrian border, raising fears that the incident could escalate to a more serious confrontation between Russia and NATO. US oil futures jumped over 2.5% on Tuesday and were up 0.4% at $43.05 in today’s Asian session.
Commodities such as copper and gold also advanced higher on the geopolitical concerns. Gold was up around 0.5% at $1078.50, while copper rose 0.2% to $2.0590 per pound in late Asian trading.
The Australian dollar, which was lifted yesterday on comments from RBA Governor Glenn Stevens, continued to edge higher on Wednesday and was up at $0.7266 in late Asian trading. Speaking at a gathering of business economists, Stevens questioned the benefits from cutting rates further and indicated he would prefer to wait until after Christmas to see what the data shows. This diminished any expectations of a rate cut at the RBA’s December meeting, pushing the aussie to a one-month high against the dollar.
The greenback was slightly weaker today as investors await a barrage of data from the US ahead of tomorrow’s Thanksgiving holiday. An upward revision to third quarter GDP data on Tuesday had limited impact on the US dollar as it was in line with estimates and was overshadowed by much weaker-than-expected consumer confidence data later in the day. The dollar was slightly down against the yen at 122.35 in late Asian session as the Japanese currency benefited from increased risk-off following the tensions in the Middle East.
The euro was firmer at 1.0663 dollars as it found support from stronger-than-expected German Ifo business confidence data. The pound also moved higher against the dollar and was up at 1.5108 in late Asian session. Sterling is likely to come into focus later today as the UK Chancellor delivers his autumn statement and outlines the latest spending review, which may involve changes to the UK budget deficit targets over the next parliament.
There is little coming out of Europe today in terms of data and the UK budget statement will be the main event in the European session. However, it will be a data-packed session in the US, which will include durable goods orders, new home sales, personal income and personal spending, as well as the initial weekly jobless claims.