Trading plan for 27/06/2018

The market attention is focused on the weakening of the yuan to the lowest level for 6 months. Trade tensions between the US and China remain the main topic, which sustains the pressure on commodity currencies and supports JPY. USD/CNY broke through the psychological level of 6.60 (at most to 6 months), even though the People's Bank of China set a fixing below market expectations. However, this does not weaken speculation that Beijing wants to depreciate the yuan as a tool in a trade dispute with the US.

The nervousness of the yuan market may spread to other emerging markets, although at the moment the reaction is minimal. But among the main currencies, we can see a weaker attitude of AUD, NZD and CAD, and the strongest is JPY. USD / JPY has been pushed to 110. EUR/USD drifts at 1.1650.

The biggest loss of night trade was spotted at New Zealand Dollar market as the NZD/USD has set an 8-month low at 0.6812. The market fears a dovish transmission from the RBNZ this evening. In addition, the business mood index ANZ disappointed by a decline to -39 from -27.2.

The stock markets reflect the tense atmosphere and uncertainty as the Japanese Nikkei falls 0.3% and the Chinese Shanghai Composite loses 1.1%.

On Wednesday 27th of June, the event calendar is light in important data releases, but the market participants should keep an eye on M3 Money Supply data from the Eurozone, Bank of England Financial Stability Report data and a bunch of data from the US: Durable Goods Orders, Goods Trade Balance, Wholesale Inventories, Pending Home Sales and Crude Oil Inventories. Thre are some speeches scheduled later today from FOMC Member Randal K. Quarles and Eric Rosengren. Just at the end of the trading day, BOC Governor Stephen Poloz will give a speech as well.

Crude Oil analysis for 27/06/2018:

The WTI crude oil is at the 6 weeks highs because yesterday the rally was initiated by the information that the US is pushing its allies to abandon the import of oil from Iran by November 4. Moreover, the API's report showed that last week crude oil inventories fell 9.2 million barrels. Before today's DoE report expectations are averaged to -2.2 million barrels. Please notice, that DoE report is the actual inventories of crude oil, gasoline, and distillate, such as jet fuel, as reported on a weekly basis. The numbers are watched closely by the energy markets, and if the results differ greatly from the expected inventory levels, the market can react strongly.

Let's now take a look at the Crude Oil technical picture at the H4 timeframe before the inventories data are released. The market stopped making lower highs and lower lows and instead it started to make higher highs and higher lows. The immediate support is seen at the level of 70.24 as the price is going to test the recent high at the level of 72.84. This scenario has even higher probability if the crude oil inventories data will be lower then estimated.

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