The presidents of the two largest economies struck a ceasefire in their trade wars on the G20 meeting, in Osaka, on Saturday. The ceasefire is according to reports, open-ended, providing some breathing space for diplomacy to get to work. Also according to news media, Trump is willing to let US companies sell products to Chinese tech company Huawei. It should be noted that the Osaka meeting marked an improvement also in the US-Turkish relationships. A side effect of the US-Sino ceasefire worth mentioning would be the possible curtailing of the Fed’s dovishness, as the outlook for the US economy may alter. We could see the USD gaining especially against safe havens such as the Yen and CHF, should the risk on sentiment return to the markets. USD/JPY opened with a positive gap during today’s Asian session, aiming for the 108.60 (R1) resistance line, yet retreated somewhat, later on. We maintain a bullish outlook for the pair, yet one should note that in the 4-hour chart the pair’s RSI indicator approaches the reading of 70, implying that the pair may be nearing an overbought position. Should the pair find fresh buying orders along its path, we could see it breaking the 108.60 (R1) resistance line and aim for the 109.15 (R2) resistance level. Should the pair come under the selling interest of the market, we could see it aiming if not breaking the 107.90 (S1) support line.
WTI prices jump ahead of OPEC meeting
Oil prices jumped early during the Asian session today ahead of the OPEC meeting, which is to take place today and tomorrow in Vienna, Austria. Media tend to note that Saudi Arabia, Russia and Iraq backed an extension of the supply cuts for another six to nine months ahead of the meeting. Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed. Given also the recent a ceasefire agreement between the US and China, we expect the need for further, deeper cuts in oil production to be subdued. Never the less, we continue to expect some support for oil prices should the extension of the current production levels be extended. Despite WTI prices dropping late on Friday aiming for the 57.70 (S2) support line, they opened with a positive gap during today’s Asian morning, breaking the 59.00 (S1) resistance line, now turned to support. We could see the commodity’s prices rise even further, should investors anticipate an oil market tightness ahead. Should the bulls dictate the pairs’ direction, we could see its prices, breaking the 61.00 (R1) resistance line. Should the bears take over, we could see WTI prices, dropping, breaking the 59.00 (S1) support line and aiming for the 57.70 (S2) support level.
Other economic highlights, today and early tomorrow
Today during the European session, we get Germany’s final manufacturing PMI and employment data, both for June, as well as UK’s manufacturing PMI for June. In the American session, we get the US ISM manufacturing PMI for June. During tomorrow’s Asian session, we get from Australia RBA’s interest rate decision, which could weaken the Aussie should another rate cut be decided
As for the rest of the week:
On Tuesday, we get from the UK the construction PMI for June. On Wednesday, we get from Sweden Riksbank’s interest rate decision, form the UK the Services PMI for June, from Canada May’s trade balance for May and from the US the factory orders growth rate for May and the same ISM Non-Mfg PMI for June. On Thursday, we get from Australia the retail sales for May. On Friday, we get from the US the employment report for June and from Canada the employment data for June and the Ivey PMI also for June.
WTI H4
Support: 59.00 (S1), 57.70 (S2), 56.00 (S3)
Resistance: 61.00 (R1), 62.75 (R2), 64.65 (R3)
USD/JPY H4
Support: 107.90 (S1), 107.20 (S2), 106.60 (S3)
Resistance: 108.60 (R1), 109.15 (R2), 109.70 (R3)
