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In the Zone
- Oil surged on news that OPEC had a 97% compliance in production cuts during June, if we continue to see restraint from Saudi Arabia, we could see top side resistance of $ 50 soon.
Just when it seemed our trading plan was on track, the Trump administration delivered another bombshell. This time it was Donald Trump Jnr who released an email string implicating himself over correspondence with the Russians about classified information on Hillary Clinton. Immediately, both the stocks and dollar plummeted, although the dollar endured some more selling in Asia this morning, the stocks had absorbed everything and actually finished the day in the green.
I am often critical on President Trump, but this time around I agree that there may be some double standards brewing. This has actually posed more questions for me than anything else such as the below:
- What was the classified “dirt” on Hillary Clinton?
- What is the difference between this and the way Clinton managed to unearth inappropriate behaviour towards women information on Trump?
- Are rumours that Clinton was being financed by Russian individuals true?
- How did ex director of the FBI Comey not know this?
The EURUSD which had traded in a very tight range yesterday, ended the day trading up by almost 100 pips just after the news. Since February 2015, the EURUSD has only managed to trade above 1.1460 a handful of times and yesterday can be added to that list. The sellers will need to see this pair trade lower than 1.1435 today, otherwise you get the feeling that this pair could be in trouble.
Today we see the USDCAD under the microscope as the BOC announce their interest rate decision, the BOC has made a point of being overly hawkish of late and I do believe that we will definitely see an interest rate hike this evening. I am wondering if we will see a, “buy the rumour, sell the fact” scenario as in my opinion this announcement is fully priced in. The market will rather wait for the language of the press conference, I believe that after the ridiculously hawkish behaviour of the BOC of late that the market expects comments that suggest another one or two hikes after tonight. If we get comment that suggests only one is enough for now – the CAD will come under massive pressure.
The USDJPY finally came to the party last night, my concern is that the pair tumbled lowered on the Trump Jnr debacle rather than actual technical. This morning we have been aided by better Japanese data and the pair currently trades at 113.50, we highlighted the 100 hour MA at 113.75 yesterday as a telling sign, if we are able to close below this level then we could see some momentum.
The NZDUSD seemed to be on course for a record day, there was natural support at 0.7200 and an initial bounce there was expected. The fundamental issues mentioned above meant that the bounce was a lot deeper than expected, but thus far this morning we have seen price stalling at 0.7240, this was previous support and fail up here it will mean that we have a change of polarity. The 200 bar MA trades at 0.7216, a close below this level will see the bears come out of the woodwork.
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