Crude oil price drops after Iran approaches US for talks
The price of crude oil declined sharply in overnight trading after US Secretary of the State, Mike Pompeo said that Iran had approached the US for talks. While not much information was shared, investors interpreted this to mean that the US could ease the sanctions it has put in place with Iran. This would then see the country return to the oil market. The news came at a time when the Iranian economy is in a depression, following the US exit from the Joint Comprehensive Plan of Action (JCPOA). It also came at a time when Javad Zarif, the country’s Foreign Affairs Minister was in the United States. In the US, data from the American Petroleum Institute (API) showed that inventories declined by more than a million barrels. Later today, data from the EIA is expected to show that inventories declined by almost 3 million barrels.
The US earnings season will continue today. The main companies that will report are Bank of America (BOA), Alcoa, Abbott Laboratories, Crown Holdings, IBM, Kinder Morgan, PNC Financial, Progressive, Texas Instruments and United Rentals. Overall, the earnings season so far has been good. Yesterday, companies like Goldman Sachs, JP Morgan, and J&J released earnings that were better than expected. However, this was not good enough to lift the major indices, which ended the day in the red.
Other than earnings, investors will receive other important data today. In the UK, the Office for National Statistics will release the inflation numbers for the month of June. This data is expected to show that the country’s headline CPI remained unchanged at 2.0%. On a MoM basis, the headline CPI is expected to remain unchanged at 0.3%. The core CPI is expected to increase slightly to 1.8% after rising by 1.7% in May. The Retail Price Index (RPI) is expected to decline slightly from 3.0% to 2.9% in June. Meanwhile, in the European Union, data is expected to show that the headline CPI remained unchanged at 1.2%. In the US, the building permits are expected to have increased slightly from 1.299M to 1.30M and in Canada, the core CPI is expected to increase from 2.1% to 2.6%.
The XBR/USD pair declined sharply yesterday after the US announced that Iran was ready to talk. The pair declined to a low of 63.45, which was the lowest level since July 11. On the four-hour chart, the pair’s price is along the lower line of the Bollinger Bands while the RSI has moved to the oversold level of 30. The moving average oscillator remains in the lower side while the price is along the 38.2% Fibonacci Retracement level. The pair will likely hold at the current level as investors wait on the developments on trade.
The AUD/USD pair started declining yesterday after reaching the important resistance level of 0.7045. The pair had just completed forming the cup part of the cup and handle pattern. It is now trading at 0.7000, which is an important psychological level. On the hourly chart, this level is slightly above the 61.8% Fibonacci Retracement level and below the short and medium-term moving averages. The RSI is slightly above the oversold level. The pair will likely continue moving lower and test the 61.8% Fibonacci level of 0.6995.
The EUR/USD pair was unchanged in the Asian session after the sharp decline in the European session yesterday. The pair is now trading at 1.1212, which is slightly below the 21-day and 42-day moving averages. The RSI has moved slightly higher from the oversold level of 16 while the accumulation/distribution has been unchanged. The pair will likely move in either direction depending on the European CPI data.