So Far So Quiet On the Middle Eastern Front. US North Korean Talks Agreed. Yen Strengthens.
The missile duel between the Iran Revolutionary Guard Corp and Israel has not escalated. Yet. The markets have largely discounted the battle as crude has settled. Not rising, not falling. Same for the USD. Low volatility with prices moving in horizontal channels is indicative of uncertainty and indecision. We expect the situation to change with a strong bias to higher oil prices a stronger USD a weaker Ruble and a weaker Turkish Lira. On the Korean peninsula sabre rattling has been replaced with a scheduled summit between Messiers Kim and Trump on June 12th in Singapore. We expect only disappointment to come of the talks as this has been the precedent for the last 70 years. Despite the odds, the markets are often dismissive of history and so are ebullient, hence the strengthening of the Yen and the broad strength around the world in the stock markets. Hope for the best plan for the worst.
The pair is falling. The Brexit talks keep taking darker and more negative turns for the British economy. It feels like a slow motion nightmare where the worst outcome form each stage of the talks seems unavoidable and then comes true, Despite efforts of the upper house and the lower house backbenchers as well as the opposition to counter this vale of tears it comes to naught. The maintenance of the customs union is not what the May administration wants. Enter today’s trade at or below 1.350. St the take profit exit order at between 1.345 – 1.340 and the corresponding stop loss exit order at between 1.357 – 1.362
Natural Gas Down.
The trade is a basic supply and demand play. The world’s inventory of the fuel is growing daily. Huge reserves are being developed in the eastern Mediterranean and the northwest offshore of Australia. This in addition to the largest known deposits in the world in the Gulf between Iran and the Emirates. As they diversify away from crude they opt to process and ship more gas. HOWEVER… as the JCPOA repudiation bites the flows of gas will be curtailed therefore the spike in price. Restricted supply. Sell today at or below 2.803 seeking profit between 2.808 – 2.811 with the stop loss between 2.799 – 2.795.
The world’s stock markets are still throwing off the drubbing of the February falls. None more so robustly that the DAX. Well into its second week of vigorous buying we enter today trade at or above 13018 with the take profit at between 13047 – 13118. The stop loss is set between 12986 – 12958.