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Oil advances as Trump walks out of Iran nuke accord

Summary:

  • US President Donald Trump announces the US will walk out of the Iran nuclear deal
  • US-based companies have been ordered to wind down their activity in Iran within six months
  • Stocks mixed, USD creeps up, oil prices rally following the Trump’s statement

There were many question marks what Donald Trump could do regarding the Iran nuke agreement, but he dispelled all those doubts yesterday evening announcing the US would withdraw from the accord being established during an Obama-era in 2015. He underlined that staying in there would risk an arms race in the Middle East describing the current deal "decaying and rotten". As far as sanctions against Iran are concerned they will be reimposed after 90-day and 180-day wind-down periods when US companies will have to terminate activity there, or will face fresh economic restrictions. According to the statement sanctions will be reinstated on the industries mentioned in the agreement three years ago, including Iran’s oil sector, aircraft exports, precious metals trade as well as Iranian government attempts to by US dollar notes. Iranian President Hassan Rouhani hit back and said "the US has announced that it doesn’t respect its commitments" adding that "I have ordered the Atomic Energy Organisation of Iran to be ready for action if needed, so that if necessary we can resume our enrichment on an industrial level without any limitations". Oil prices witnessed gargantuan volatility as traders were waiting in suspense for the Trump’s announcement. In effect, there was a massive V-turn, and currently oil prices are trading just shy of their peak placed under $71.

link do file download linkTechnically West Texas Intermediate prices could be poised to enter uncharted waters if they manage to cope with a resistance at $70.8. A powerful support line might be set nearby $67, and until the price keeps moving far above this line bulls seems to hold an advantage. Source: xStation5

What happened elsewhere? So, not too much to be honest when we are talking about stocks globally. The US indices ended Tuesday’s trading pretty flat even as some companies might be adversely influenced by US sanctions against Iran e.g. Boeing. In Asia investors have shared a cautious mode, and therefore the most important indices are trading mixed with the Japanese NIKKEI (JAP225 on xStation5) leading the losses being 0.5% down. Meanwhile, on the currency front one may notice the US dollar keeps flexing its muscles adding fresh gains almost against all major currencies except those correlated to oil prices such as CAD and NOK (the losses there are marginal though). The greenback has been once again buttressed by rising yields on the US 10Y bond as they have closed 3% overnight (it keeps on trading just shy of this mark at the time of writing). Finally, let’s spot that gold prices have been remarkably resilient to the appreciating US dollar since the beginning of this month. As a result, they have not lost too much steam over this period even as we have already seen fresh lows on the EURUSD. Having said that, it would be a long shot to buy this precious metal at a time when the US currency is constantly pushing higher. Either way, this market seems to deserve more attention going forward offering a possible decent opportunity when the USD strength ultimately comes to an end.

link do file download linkGold prices keep trading water despite the strong US dollar. A technical landscape favours neither bulls nor bears albeit the former group could hold out hope for a trend resumption as the price has failed to move below $1300 as of yet. Source: xStation5

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