The Iranian Deal: One week and counting. What is to be done?

Daily Analysis - 04/05/2018

The Iranian Deal: One week and counting. What is to be done?

One week remains until the US administration decides whether or not to maintain the Iran deal. This is a big deal. Not only for us as traders, but also for the stability of the Middle East and the wider world of trade and diplomacy. On May 12, next week, the US President decides to re-impose sanctions on Iran or not. We are of the opinion that this is the decision that will be taken. We think this way because of the personnel changes made to the administration of late. Messiers Bolton as National Security Advisor and Pompeo as Secretary of State are both hawks on the matter and favor putting Iran back in her box. Despite personal lobbying otherwise from Chancellor Merkel and President Macron, and with the help of some staged political theater form the Israeli PM, re-imposing sanctions will severely rattle the world’s markets. Oil certainly but the foreign exchange markets and likely the stock markets as well. We will monitor this volatile situation for you regularly until the announced outcome. This could get severely rocky. Think carefully how you want to be positioned. Long assets? Hedged. Short assets? Consult with your account managers to discuss the matter. They are weighty indeed.

Natural Gas Down.

NGas has been declining in price since reaching a peak of close to 16 in 2005. Excluding a steep fall between 2008 – 2009 the decline has been gradual and contained lots of adjustments. What we expect from a widely used and produced commodity like Gas. The coming online of more and more of the commodity is what is bringing price down. Giant deposits in the eastern Mediterranean and the northwest offshore of Australia not to mention the shale basin in the US have brought more supply to the market. We enter today’s trade on the short side at or below 2.733 placing take profit exit orders between 2.726 – 2.717 and our stop loss exit order between 2.740 – 2.745.

DAX Up.

The DAX is doing yeoman’s work as the bell weather of Euroland buying and optimism. Despite the irregular performance of the US indices and the Asian ones too since the falls of February, once the DAX found its footing last week it has taken a “damn the torpedoes, full steam ahead” attitude. You read of “animal instincts” or other such animistic phrases to describe confident buying. Whatever you call it, trade along with it. Enter today’s position at or above 12760 seeking profits between 12791 – 12811. Place stop loss exit orders between 12711 – 12676.

CHFJPY Down

The pair has been in decline since the February falls but has weakens so much that it is approaching an important resistance level. Should the pair break below 107.840 Yen strength against the Swissie could extend to the 106 neighborhood and below to the 104 as well. The Swissie has been experiencing this weakness across the global trading currency board for weeks now. It is a good solid trade that could be taken well into the next few weeks. We’ll keep our stoops loose, meaning not too close to the entry today as to let the positon breathe, meaning not get stopped out on anything but unusual volatility. Enter today at or below 109.190. Place take profit order at between 108.944 – 108.140 and the stop loss exit between 109.394 – 109.684.