Geopolitical tensions remain elevated

On a geopolitical level, tensions in the Middle East remain elevated, as despite no clear retaliatory strike by Iran against Israel, military assets are still being moved into the region. In particular, US Defence Secretary Lloyd Austin ordered on Sunday the deployment of a guided missile submarine to the Middle East, with some media outlets also claiming that the Defence Secretary has ordered the USS Abraham Lincoln aircraft carrier strike group to hasten its pace. Nonetheless, at this point in time the movement of strategic military assets into the region is mere posturing by both sides, either as a deterrent or in preparation in the event that the situation drastically deteriorates. Nonetheless, with tensions remaining high, it may funnel safe haven inflows into the precious metal and thus aid gold’s price, in addition to potentially providing support for oil prices, given the vital oil arteries that pass through the region.Canada’s unemployment rate for July which was released during Friday’s American session, came in lower than expected at 6.4% versus the expected rate of 6.5%. Yet despite coming in lower than expected, it remained at the same rate as the prior month which showcases that Canada’s unemployment rate remained steady at 6.4% which may have aided the Loonie.Over in the UK, according to Reuters, BoE policymaker Catherine Mann stated that wage growth is still a concern for inflation. As such the release of the UK’s employment data tomorrow may take on an even greater significance, as it may tilt the balance of power within the BoE towards those wishing for the bank to keep interest rates steady rather than continue on its monetary easing path.In Australia, RBA Deputy Governor Hauser stated that the policy strategy required to deliver the bank’s 2% inflation target and the economic judgements that inform it, cannot be stated with anything like the same degree of certainty. Overall it appears that the Deputy Governor is implying that the bank’s road on bringing down inflation to 2% may be unpredictable and bumpy.

WTICash appears to be moving in a sideways fashion. We opt for a sideways bias for the commodity’s price and supporting our case is the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. For our sideways bias to continue we would require the commodity to remain confined between the 71.50 (S1) support level and the 78.00 (R1) resistance line. On the flip side for a bullish outlook we would require a clear break above the 78.00 (R1) resistance line with the next possible target for the bulls being the 83.45 (R2) resistance level. Lastly, for a bearish outlook we would require a clear break below the 71.50 (S1) support line, with the next possible target for the  bears being the 64.10 (S2) support level.

GBP/USD appears to be moving in a sideways fashion and supporting our case is the pair’s failure to break below and above the 1.2680 (S1) support line and the 1.2775 (R1) resistance level respectively. Moreover, the RSI indicator below our chart which still registers a figure near 50, implying a neutral market sentiment. For our sideways bias to continue we would require the pair to remain confined between the 1.2680 (S1) support line and the 1.2775 (R1) resistance level. On the flip side for a bullish outlook we would require a clear  break above the 1.2775 (R1) resistance line with the next possible target for the bulls being the 1.2855 (R2) resistance level. Lastly, for a bearish outook we would require a clear break below the 1.2680 (S1) support level with the next possible target for the bears being the 1.2615 (S2) support level.

Other highlights for the day:

Today in the European session, we get Turkey’s unemployment rate for June and the Czech Republic’s CPI rate for July, whereas in tomorrow’s Asian session, we get Japan’s corporate goods prices rate for July and Australia’s wage price index rate for Q2.

WTICash Daily Chart

• Support:  71.50 (S1), 64.10 (S2), 57.30 (S3)
• Resistance: 78.00 (R1), 83.45 (R2),  89.50 (R3)

GBP/USD 4H Chart

• Support:  1.2800 (S1), 1.2615 (S2), 1.2525 (S3)
• Resistance: 1.2775 (R1), 1.655 (R2),  1.2945(R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

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