The U.S. sanctions on Iran begin

Yesterday U.S. sanctions against OPEC member Iran officially came into effect.

The sanctions were not aimed at Iran’s oil exports instead they target Iran’s U.S. dollar purchases, metals trading, coal, industrial software and auto mobiles.

U.S. sanctions on Iran’s oil exports have been given a 180-day “wind-down period” and will be enforced on the 4th of November.

US President Donald Trump made it clear through his twitter account that any country doing business with Iran will NOT be doing business with the United States adding even more emphasis to the matter.

Oil prices rose on Tuesday however intensifying concerns on further developments on the matter could affect the market economically and geopolitically.

Crude Oil rose yesterday, breaking the 69.54 (R1) resistance level and corrected back below that level later on.

It must be noted that in August, most of Crude Oils movement has been between our 69.54 (R1) and the 68.43 (S1) Support level.

Technically, the RSI indicator in the 4 hour chart remains near the reading of 50, implying a rather indecisive market.

Should traders favor WTI long positions, we could see the commodity breaking the 69.54 (R1) resistance line and aim for the 70.57 (R2) resistance level.

On the flip side, should traders favor WTI short positions we could see it aiming for the 68.43 (S1) support line and aim even lower.

Further support may be provided today for Oil prices as the EIA Crude oil weekly figure is forecasted to release drawdown of -3.33M barrels.

Chinese equities touch session highs while the USD weakens

After a strong rally since mid-April, the USD was seen weakening across the board yesterday with many analysts’ makings a case for the greenback beginning to lose steam.

On the other hand Chinese stock market rallied strongly towards the close, boosting risk appetite.

Analysts were interested in seeing whether there was a connection between the two facts, as the PBOC did not fix the yuan weaker against the dollar yesterday.

Most significant came in the Aussie which rallied to a one-week high against the greenback.

RBNZ’s interest rate decision

On Thursday, early in the Asian session we get RBNZ’s interest rate decision.

The bank is widely expected to remain on hold at +1.75% as currently NZD OIS imply a probability for such a scenario of 99.15% so the market’s attention could turn to the accompanying statement.

With the inflation rate for Q2 accelerating to +1.5% yoy, unemployment remaining at rather low levels (4.5%) and no new release regarding the GDP growth rate, we could see chances for the bank’s next rate move to be a rate cut being reduced and the uncertainty of the relative remark slowly being removed.

Should the bank have a more hawkish tone than in the previous decision we could see the Kiwi strengthening, while should it have a neutral to dovish tone, NZD could weaken or the meeting could pass as a non-event NZD/USD jumped on today’s Inflation Expectations (QoQ) and moved higher breaking our 0.67584 (R1) resistance line and corrected lower later on.

Should the bears dictate the pairs’ direction we could see it moving downwards to the 0.66873 (S1) support line and even breaking it.

On the other hand if a bullish movement overtakes the pair we could see it break the 0.67584 (R1) resistance line and aim higher for the 0.67848 (R2) resistance barrier.

In todays other economic highlights:

In the American session we get Canadas Building Permits for June and from the US the EIA Weekly Crude Oil Inventories Survey.

As for speakers FOMC member Thomas I. Barkin speaks.



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