Europe session: Brent drops 5.57% as traders weigh US-Iran deal talk

Brent crude fell 5.57% to $98.52 over the session [P], extending a slide traders linked to bets on a US-Iran settlement even as Iran’s Revolutionary Guard Corps said four tankers were destroyed after hitting mines near the Strait of Hormuz [1]. President Trump told the Financial Times Washington had no immediate plans to strike Iran, while a senior Iranian official said Tehran could reopen the strait within two days if sanctions were lifted and US naval forces withdrew [2]. DAX 40 jumped 2.28% to 26,479 between 08:00 and 16:30 GMT [P], while EUR/USD slipped 0.07% to 1.1226 and GBP/USD edged up 0.01% to 1.3465 [P].

Eurozone flash CPI rose to 4.0% year-on-year in October from 3.8%, matching forecasts, with core CPI steady at 2.5% [C]. Eurostat attributed the jump mainly to energy costs, which climbed to 20.8% annually from 18.9% [3]. Markets had priced roughly a 72% chance of another ECB hike in December before the release, with that probability edging higher afterward [3]. The report drew little direct market reaction, with FXStreet noting euro moves earlier in the session were attributed mainly to broad dollar weakness following US midterm election results showing Democrats winning control of both the House and Senate [3][4].

Gold added 0.34% to $4,051.4 [P], supported by the softer dollar and falling US Treasury yields tied to the election outcome, with the Dollar Index dropping to around 101.25, its lowest since late September [5]. The CME FedWatch Tool showed markets pricing close to 80% odds of a December Fed rate increase, a view reinforced by Tuesday’s JOLTS data showing US job openings rising to 7.523 million in September [6]. Later in the session, US ISM Services PMI came in at 54.5, below the 54.8 forecast and prior 54.9 [C], as investors looked ahead to Friday’s non-farm payrolls for further signals on the labor market and Fed policy [5].

Sources: [P] Prices: Yahoo Finance 5-minute bars, session open to close; calculated by Praevis; [C] Releases: Praevis economic calendar; [1] FXStreet; [2] OilPrice.com; [3] FXStreet; [4] FXStreet; [5] FXStreet; [6] FXStreet