Trading plan for 11/07/2018
On Tuesday evening, the US announced that it is preparing a list of Chinese commodities worth USD 200 billion, which may be subject to subsequent 10% customs duties. Information electrified the market. In the first USD/JPY reaction, it fell from around 111.30 to 111.05. AUD is hit the hardest, which has been pushed to USD 0.7410.
So far, China has not announced retaliation. The Chinese Ministry of Trade expressed its surprise at the situation, but also indicated that cooperation is the only right way for a US-China relationship. After these comments, the market calmed down a bit. Nonetheless, the yuan is losing 0.4% to the dollar today.
The remainder of the trade war has damaged the sentiment on the stock market. Shanghai Composite is losing 2.2% and Japanese Nikkei225 is down 1.0%.
On Wednesday the 11th of July, the event calendar is busy in important data releases. The global investors will receive data on PPI inflation from the US. Canadians will decide on the level of interest rates. We can also expect Nouy from the ECB, Carney from BoE and Williams from the Fed to give a speech.
Crude Oil analysis for 11/07/2018:
WTI crude oil fell to USD 73.1 per barrel overnight, although it is slowly recovering and is already 50 pips higher. The declines have been caused by the news that the US is considering excluding some countries from potential sanctions that will affect countries that import oil from Iran in November. Earlier, the API report showed a strong drop in inventories in the US last week: -6,8 million barrels, almost double the forecasts before today’s DoE report. The DoE expects a drop of -3,894 barrels after a gain in stockpiles of 1245 last week.
Let’s now take a look at the Crude Oil technical picture at the H4 time frame. The sequence of consecutive higher highs and higher lows are indicating a strong uptrend on this market, which made a new swing high recently at the level of 75.30. Currently, the price is testing the nearest support at the level of 72.84, but the local low at the level of 72.13 was made already. Moreover, there is a clear bearish divergence between the price and the momentum oscillator, so it might be a time for a corrective pull-back towards the level of 69.39. Worse than expected DoE inventories data might trigger this move downward.