Crude oil price falls as Iran seizes another tanker
The price of crude oil declined today after Iran announced that it had captured a vessel in the Persian Gulf. The capture of the tanker, which was carrying more than 700,000 liters of oil, happened on Wednesday last week. The Iranian Revolutionary Guard said that the vessel was captured for smuggling crude oil. The capture of the Iraq ship happened a day after United Arab Emirates (UAE) officials traveled to Iran to discuss maritime border cooperation.
The fallout on trade continued during the weekend. Early today, the renminbi declined below RMB7 per dollar, which was the first time since the global economic crisis of 2008. As the price declined, it breached a widely recognized floor set by the Chinese central bank. Over the weekend, it emerged that Trump announced tariffs against his advisors’ recommendations. The advisors warned Trump that the new tariffs would hurt the US economy more than that of China. The trade issue will remain in the spotlight for investors.
In addition to trade, investors will focus on the PMI data from a number of countries. In Germany, the composite PMI for July is expected to remain unchanged at 51.4. The services PMI too is expected to remain unchanged at 55.4. In the EU, the services and composite PMIs from Markit are expected to remain unchanged at 51.5 and 53.3 respectively. In the UK, the services PMI for July is expected to increase to 50.4 from the previous 50.2. In the US, data from ISM is expected to show that the non-manufacturing PMI increased from 55.1 to 55.5.
The EUR/USD pair rose to a high of 1.1132 in the Asian session. This was a continuation of an upward trend that started on Thursday, when the pair was trading at 1.1025. On the hourly chart below, the pair has moved above the 25-day and 50-day moving averages while the RSI has moved slightly lower than the overbought level. The bull’s power has continued to move up. The pair will likely continue moving higher to test the important resistance level of 1.1150.
The XBR/USD pair declined to an intraday low of 60.90 after Iran announced it had captured a ship at the Strait of Hormuz. On the hourly chart, the price was below the 25-day and 50-day moving averages while the price was along the lower line of the Bollinger Bands. The RSI moved close to the oversold level. The pair will likely continue moving lower to test the support of 60.50.
The USD/CHF pair declined sharply shortly after Trump announced the new tariffs on Chinese goods. Since then, the pair has moved from a high of 0.9974 to a low of 0.9785. This decline happened as investors moved to safe-haven currencies. On the hourly chart, the pair is trading below the 25-day and 50-day moving averages. The RSI has moved below the oversold level of 30. The same downward trend has happened with the accumulation/distribution indicator. The pair will likely continue moving lower to test the important support level of 0.9695.