Iran Rebukes the New Sanction by U.S. Government
- 1 July 2019
CURRENCY MARKET OBSERVATIONS – 1 July 2019
Fundamental Outlook The U.S. Government announces new sanction on the Iranian Supreme leader, namely Ayatollah Ali Khamenei on accessing international financial system. Iran rebukes the new sanction and says this will cut the diplomatic ties between the two countries completely.
In G20 meeting, most countries leader reiterated on the free trade ties among global partners. French President Macron has refused to sign all documents unless the Paris climate treaty is addressed.
The U.S. Treasury Secretary cites the negotiation with China to reach a deal is almost at 90 percent and will be completed soon. G20 meeting ended in Japan Osaka on last weekend followed by the Trump-Xi meet on negotiating trade deal. Traders are staying sidelined and observing the outcome of sentiment after the leaders met. Analysts reckon the world economic growth will be affected in worse situation if more tariffs are added!
Middle East tension escalates after an unmanned drone was shot down by Iranian military force on 20 June. President Trump threatens the “obliteration” of Iran if they strike further attack on U.S. instrument. Crude prices have been climbing as traders bet on supply squeeze may erupt from Gulf countries.
Technical Forecast USD/JPY traded in small recovery last week. This week, it will depend on Dollar trend to move the USD/JPY market. Technically, we foresee the range will be constricted from 106.50 – 108.00 region until it breaks beyond in either directional headway. Risk control is advised in case of adversity towards you.
EUR/USD traded around 1.1380 in small range last week while confluent to the EMA200 line. From the technical angle, we reckon a huge potential to gain on the upside as long as the 1.1330 support can stay unbroken this week. Our identified first resistance is set at 1.1450 level, which piercing above this level will probably rise to 1.1550 region.
GBP/USD consolidated in small range around 1.2700 area last week. Market is still clueless in the forward trend as BREXIT matter remains gloomy over British economy. This week, we project the range will be prone to slightly uptrend and contained from 1.2650 – 1.2800 region.
Gold prices hit USD1438 /oz at 6-year high last week and retreated. This week, we expect the range to be slightly in whipsaw trend but contained from USD1400 – USD1440 /oz. On the other hand, falling beneath USD1400 /oz benchmark will indicate a new selling force in market for testing the next support at USD1370 /oz area.
WTI Crude prices have risen to test USD60 /barrel after the tension increased in Middle East. However, we also notice the reduction in day range that indicates falling interest in market. This week, the trend might reverse down and head back to USD55 /barrel. On the other hand, breaking above USD60 /barrel will likely rise to USD63 /barrel before encountering profit-taking activity.
Silver prices topped its 3-month high at USD15.55 /oz and fell on profit-taking. The market has good support at USD15.20 /oz and probably will thread sideways within USD15.20 – USD15.50 /oz this week. On hind side, piercing above USD15.55 /oz resistance is highly possible for attempting USD60 /oz target. We foresee strong buying interest will emerge in the USD15.00 – USD15.20 /oz region.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in bearish trend last week on lacklustre export and weaker soyoil prices. A stronger Ringgit as the USD/MYR falls from 4.45 to 4.13 is another reason for putting a lid on the demand. FCPO September19 contract closed at RM1951 /MT on Friday. This week, we hope to see a rebound though the range could be narrow from RM1940 – RM1980 /MT region. Breaking beneath RM1940 /MT will head down to RM1880 /MT as our next target.
DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own. He can be reached at firstname.lastname@example.org