Talk of escalation and a ninth night of fire in the Persian Gulf has raised the price of Crude Oil and elevated tension in the Middle East.
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The USA / Iran confrontation has continued to produce kinetic conflict, with the USA and Iran trading fire for a ninth consecutive day. Iran has fired on Kuwait, Bahrain, and Jordan, and killed US military personnel. Trump is threatening to start targeting infrastructure in an attempt to drive Iran to the negotiating tabIe. I have been writing here for a while that the US administration's pursuit of a "good deal" with the regime in Iran will never yield fruit and is incompetence and wishful thinking taken to an infinite level. Unfortunately, I am being proven right. The Strait of Hormuz is effectively 99% closed, with just a tiny trickly of crude oil shipping getting through, or any shipping for that matter. Spot WTI Crude Oil has risen again and trades above $80 while Brent Crude Oil is trading above $90. Long Crude Oil is risky over the medium term in case there is some breakthrough between the USA and Iran, but it could be an interesting play for day traders.
Markets are awaiting the release of Canadian CPI (inflation) data today, which could move the value of the Loonie if it surprises. The expectation is for a month-on-month contraction of 0.2%.
Stock markets look generally fragile after mostly declining last week. The Indian stock market had a notably sharp fall today, driven mainly by the fear of renewed war between the USA and Iran and its economic implications, which also pushed the USD/INR currency pair higher. The prospect of war in the Persian Gulf is weighing on stocks everywhere and another factor is the feeling that the AI boom is due a sharp decline, which is why we have seen tech stocks sell off more strongly lately than anything else. Looking at a chart of the the NASDAQ 100 Index a sharp and sudden fall would not be surprising, with the price near its two-month low.
The USD/JPY currency pair is quietly consolidating not far from its multi-decade high price. The Forex market generally has been quiet since this week's open, partly due to the holiday in Japan.
Precious metals such as Silver and Gold continue to look vulnerable near multi-month lows. Gold, notably, is still being held by a long-term descending trend line which currently sits at about $4,131. I do not short commodities, but if I did, I would be short of these two precious metals, especially Silver which looks to be leading the way lower.
Bitcoin seems to be rejecting the key resistance at $65,233 again. So far, it has not succeeded to break out beyond that level. It may well make a meaningful decline from here.