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    Afternoon Report – Thursday 8th August




    Oil jumps on expectations producers may cut supply after 4% slump

    (Reuters 08/08/2019) - Oil futures jumped more than $1 a barrel on Thursday, recovering half of the nearly 5% losses in the previous session, on expectations that lower prices may lead to production cuts.

    Both contracts hit their lowest levels since January on Wednesday after a surprise build in U.S. crude inventories added to worries that the China-U.S. trade war could further dampen demand growth this year.

    Analysts said that crude prices were moving higher on the expectation that Saudi Arabia, the world’s biggest oil exporter, and other producers in the Organization of the Petroleum Exporting Countries (OPEC) may take action to support the market by reducing supply.

    “The threshold is $60 a barrel and if you go below that for a significant period of time, I would expect supplies to be taken off the market in order to support prices up,” said Virendra Chauhan, an oil analyst at Energy Aspects in Singapore.

    Bloomberg in a report on Wednesday cited a Saudi official saying that the country is in talks with other producers to take action to halt the oil price slide.

    “Trade war rhetoric will continue to guide markets, but the comments from Saudi Arabia could lead to unprecedented action to stabilize prices,” said Alfonso Esparza, a Toronto-based senior market analyst at Oanda.

    “It is hard to imagine what that would look like given how hard it was to get the OPEC+ to agree to the production limit agreement, but given the potential free fall from crude if the trade war continues, no option is off the table,” he said, referring to OPEC+, a group including OPEC and non-OPEC producers such as Russia.

    US: No trade deal with China is the most likely scenario – Danske Bank

    (FXStreet 08/08/2019) - Danske Bank analysts point out that the US-China trade relations have clearly deteriorated and their baseline scenario is now that the two countries will not reach a deal this side of the 2020 election.

    Key Quotes: “In this scenario, we see two possible paths. One is no deal but a status quo without much further escalation (35% probability). The other is an all-out economic war in which we see a significant escalation of the trade war (25% probability).”

    “We also still envision a scenario (40% probability) in which Donald Trump scales back his demands on China to reach a deal in 2020, in which China buys significant amounts of agricultural products.”

    “Trump's big headache with respect to the 2020 election is the substantial pain the trade war is inflicting on US farmers. These are decisive voters in key swing states, where his showing in the polls is currently weak.”

    “Overall, we see a clear increase in downside risks to growth over the coming year. The main restraint on Trump's economic attacks on China is the potential damage to US markets and the economy resulting from Chinese retaliation.”

    EUR Futures: further consolidation on the cards

    (FXStreet 08/08/2019) - Investors once again trimmed their open interest positions on Wednesday, this time by around 6.2K contracts according to preliminary figures from CME Group. In the same line, volume went down by the second consecutive session, now by nearly 17.1K contracts.
    EUR/USD faces extra rangebound around 1.1200.

    EUR/USD remains unable to break above the 1.1200 area on a sustainable basis, navigating instead within a sideline theme amidst declining open interest and volume. That said, the continuation of the consolidative stance is expected to persist around current levels, at least in the very near term.


    Below are Trading Central's Intraday preference recommendations. Short (SELL) positions and long (BUY) positions have two targets issued which may be used as take profit levels. Above or below a certain figure indicates the pivot level which may be used as a level for stop loss.

    EURGBP 30 Minute – The downside prevails as long as 0.9244 is resistance.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    GOLD 30 Minute – Long positions above 1491.00 with targets at 1513.00 & 1521.00.

    SILVER 30 Minute – Long positions above 17.0200 with targets at 17.3200 & 17.4200.

    NZDCAD 30 Minute – Sell below 0.8601, eye 0.8521.

    USDJPY 30 Minute – Long positions above 105.90 with targets at 106.60 & 106.85.

    CRUDE OIL 30 Minute – Long positions above 51.70 with targets at 53.15 & 53.75.

    ASX 200 Daily – Short positions below 6715.00 with targets at 6445.00 & 6320.00.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

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    Posted: August 08, 2019 | 6:12 AM