Oil eased on US-Iran talks, Cryptos' wake up call

The dollar made broad gains on Tuesday and held back a recovering euro on a quiet day as traders awaited the US inflation data later this week, hoping that it might trigger bets on faster interest rate hikes.

U.S.-Iran talks lower oil prices

In the lead up to the resumption of indirect talks between the United States and Iran, oil prices eased Tuesday. The talks may revive a nuclear deal that could remove sanctions on Iranian oil sales, increasing global supplies. Brent crude slides towards $91 after hitting a seven-year high of $94. US West Texas Intermediate crude also fell below $90.

Asian markets retreated early gains

A broad measure of Asia-Pacific shares outside Japan, MSCI's broadest index, fell 0.3% to 612.3 from 617.7, its highest level since January 25. Many Chinese stocks ended Tuesday in the red, with the CSI300 index down 1.8%, as investors were distressed over the prospect of the US government adding a further 33 Chinese entities to its export control list. 

A Cabinet Office survey showed Tuesday that Japan's service sector sentiment index fell for the first time in five months in January due to curbs aimed at stemming a record increase in Coronavirus infections. 

Broad bond market sell-off

The market is worried that if Treasury yields continue to rise, which will influence rates across other asset classes, more downside may be ahead. Ten-year Treasury note yields were recently at around 1.92% after reaching a high of 1.936% on Friday, their highest level in two years.

Treasury bonds and Japanese government bond yields also climbed in Asia due to the prospect of higher interest rates. The 10-year Treasuries yield rose about 3 basis points to 1.9500%.

In the past week, two-year German bonds experienced their worst week since the spring of 2008, with the selling continuing on Monday. Italy's and Greece's bond prices were hit the hardest.

Bitcoin's winter is ending?

Like those of the rest of cryptos, Bitcoin's price, which had plummeted since late 2021, has risen 16% in recent weeks towards $45,000, which has led some to declare that crypto winter is over. We see a similar market condition in other popular cryptos like Ethereum and Ripple. They have broken their downtrend lines, and buyers are on the verge of reaching significant resistance levels.

A quiet calendar on Tuesday

A quiet data calendar awaits on Tuesday, with the US trade balance expected to show a deficit of 83 billion dollars in December. The significant data announcement for today will be the EIA monthly outlook set to be released in the afternoon.