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The big story in markets is the jump in oil prices after Saudi oil facilities were attacked by Houthian drones over the weekend. The attack wiped out about half of the kingdom’s production and that saw oil skyrocket at the open this week.

Gains have been tempered with somewhat with Brent back under $70 but is still nearly 10% higher than the close last week. That is keeping the loonie underpinned to start the new week though USD/CAD has risen back to 1.3230 from a low of 1.3207 earlier.

Meanwhile, the yen and franc are also beneficiaries of the news as escalation in geopolitical tensions see haven flows step in with gold also rising back above $1,500 currently.

The pound is the laggard as it gets off to a slower start this week amid a roaring finish towards the 1.2500 handle in cable on Friday. Latest news on the Brexit front is that Boris Johnson is said to reject a Brexit delay and he will make that clear to European Commission president Juncker in talks later today.

Looking ahead, I would expect the Saudi news to continue reverberating through markets to start the week and that should keep sentiment on the softer side for the time being. If anything, I’d watch for any potential turnaround in equities to get a sense of any change in the current market mood.

But I would expect oil prices to stay underpinned in the short-term but the “blip” today should not detract from the overall outlook too much. I mean sure, Saudi infrastructure and facilities have been hit and it will take time to rebuild but they have more than enough spare capacity/stockpiles to limit the loss of market share for now.

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