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| Donald Trump |
U.S
stocks ended mixed on the news while oil prices fluctuated in each direction,
as investors considered the potential negative ramifications of Trump’s
decision. The U.S President adopted a very aggressive rhetoric during the
announcement and failed to hold back from his view that the 2015 agreement was
“defective” at its core.
While
it was widely anticipated that Trump would pull out of the Iran agreement, what
is likely to leave a lasting impact on the markets is the threat that he would
also penalize those who help Iran. These overall risks are encouraging traders
to price in some new geopolitical risk premium, and his threat can potentially
be seen as a blow for U.S allies. There is a threat of Trump’s stark tone
questioning U.S relations with its European allies, especially given that the
likes of France and the United Kingdom had appealed for Trump not to withdraw.
It
should also be noted that both China and Russia are also part of the 2015 Iran
nuclear agreement. Relations between Trump and both these nations have been
questionable in recent weeks. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
What this all likely means to the financial markets is that anxiety could be
heightened over a new round of geopolitical tensions. This will not have been
helped by Iran immediately stating that it was preparing to restart uranium
enrichment, which is key for making nuclear weapons.
The
prospect of heightened geopolitical tensions in the Middle East following
Trump’s departure from the nuclear deal is seen as encouragement for risk
aversion. A risk-off environment is likely to attract the flight to safety
mindset from traders, where both Gold and the Japanese Yen would be seen as
potential beneficiaries.
Naira
steady against Dollar
The Naira held
its ground on Wednesday despite the Dollar Index rallying to a fresh 2018 high.
With
the Dollar heavily supported by expectations of higher U.S interest rates and
risk aversion souring appetite for riskier assets, emerging market currencies
such as the Naira could feel the heat. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
However, the Naira could remain supported by appreciating oil prices following
Trump’s decision to withdraw from the Iran nuclear deal.
The
main event risk for the Nigerian economy this week will be the inflation
figures that are scheduled for release on Friday. Any signs of inflationary
pressures cooling could support expectations that the CBN will announce an
interest rate cut this year.
Dollar jumps to
fresh 2018 highs
It is
shaping up to be another heavily bullish week for the Dollar which has sprinted
above 93.25, its highest level this year against a basket of major currencies.
Thanks
to a hawkish Federal Reserve, interest rate differentials are moving in favour
of the Dollar. Price action suggests that bulls are back in town, with further
upside on the cards amid growing expectations of higher U.S interest rates.
Taking a look at the technical picture, the Dollar Index remains firmly bullish
on the daily charts. A decisive breakout and daily close above 93.00 could
encourage an incline higher towards 93.50.
Commodity
spotlight – WTI Crude
Oil
bulls entered the scene on Wednesday morning after Trump deserted the Iran
nuclear deal. WTI Crude has scope to venture higher in the near term, as fears
of heightened geopolitical tensions in the Middle East fuel concerns of
potential supply disruptions.
Taking
a look at the technical picture, WTI Crude remains firmly bullish on the daily
charts. There have been consistently higher highs and higher lows while the
MACD trades to the upside. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
A solid daily close above the $70.00 level could invite an incline higher
towards $71.10. Alternatively, if bulls are unable to keep prices above $70.00,
the next key level of interest will be at $69.30.
Gold punished by strengthening
Dollar
An
aggressively appreciating U.S Dollar is likely to continue punishing Gold this
week. Although, the yellow metal was initially boosted by market jitters
following Donald Trump’s Iran announcement, gains were later capped by a strengthening
Dollar. Gold remains vulnerable to downside losses, especially when considering
how Dollar strength remains a dominant market theme.
Taking
a look at the technical picture, previous support around $1324 could transform
into a dynamic resistance that encourages a decline towards the psychological
$1300 support level.
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