Markets seeking attention

Peter Iosif, ACA, MBA IronFX

USD edges lower in the FX market

The USD edged lower in the FX market yesterday and during today’s Asian session despite renewed tensions in the Persian Gulf which could generate safe-haven inflows for the USD. Market worries for a possible rise of oil prices tended to enhance also market worries for a renewal of inflationary pressures. Adding to the pressure, the June FOMC minutes, showed a hawkish split among Fed policymakers, while markets are currently partially pricing in a rate hike in September.

Mixed signals from US equity markets

Dow Jones futures dropped, yet the overall picture of the US equities market remains mixed. The escalation of tensions in the Middle East and the prospect of rising oil prices tends to weigh on US equities, as market participants weigh the possible negative effect of higher energy costs on profitability. Also the hawkish tone of the Fed’s June meeting minutes is a downturn for US equities. Should the market’s worries intensify we may see US stock markets ending their day in the reds and vice versa.

Oil prices fail to materially rise

Oil prices rose yesterday, as market worries for the Middle East intensified. US President Trump stated that the negotiation process is practically over, and the US military carried out new airstrikes against Iran. Nevertheless, we deem the rise as not proportionate to the developments for the time being, which may be a signal that the markets may not be as convinced for the possibility of a full US -Iran conflict yet.

Gold remains relatively stable

Gold’s price edged lower yesterday yet recovered during today’s Asian session. Oil prices surged and inflation concerns intensified given the developments in the Middle East. We still view the negative correlation of the USD with Gold’s price as being active despite being currently somewhat blurred and expect that a possible strengthening of the USD could weigh on gold’s, while further weakening of the USD could lift gold’s price.

Other highlights for today

Today we get Germany’s trade data for May, the weekly US initial jobless claims figure and on a monetary level, we note that ECB President Lagarde and Board Member Cipollone participate in Euro Group meeting, while NY Fed President Williams and Dallas Fed President Logan speak. In tomorrow’s Asian session, we get Japan’s Corporate Goods prices for June.

Charts to keep an eye out

GBP/USD continued to rise aiming for the 1.3510 (R1) resistance line. We maintain a bullish outlook for the pair and intend to keep it as long as the upward trendline guiding it remains intact. We note the bullish tendencies of the pair. Should the bulls maintain control over cable we may see it breaking the 1.3510 (R1) resistance line and set as the next possible target for the bulls, the 1.3655 (R2) resistance level. Should the bears take over, we may see GBP/USD breaking initially the upward trendline guiding it a first signal of an interruption of the upward movement, continue to break the 1.3300 (S1) support line and start aiming for the 1.3155 (S2) support level.

WTI’s moved higher placing some distance between its price action and the 71.85 (S1) support line yesterday, yet edged lower in today’s Asian session. We continue to expect some stabilisation of WTI’s price at the current stage. Should the bears regain control over WTI’s price we may see it breaking the 71.85 (S1) support line and continue to break also the 67.05 (S2) support level as the pair has to form a lower trough for a bearish outlook. Should the bulls take over we may see WTI’s price nearing if not breaking the 76.60 (R1) resistance line with the next possible target for the bulls being the 82.00 (R2) level.

GBP/USD daily chart

Support: 1.3300 (S1), 1.3155 (S2), 1.3005 (S3).
Resistance: 1.3510 (R1), 1.3655 (R2), 1.3865 (R3).

WTI daily chart

Support: 71.85 (S1), 67.05 (S2), 60.90 (S3).
Resistance: 76.60 (R1), 82.00 (R2), 88.60 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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