
Yesterday’s session was
dominated by reaction to the news, over the weekend, that an agreement has been
reached to restrict Iranian development of its nuclear capacity in return for
the partial lifting of sanctions. This had the immediate effect of lowering the
price of oil, as Iranian oil can now be expected to come back onto western
markets.
The Norwegian Krone (Four
hour chart above) reacted immediately on the opening of the Aussie / Kiwi /
Asian session, as Norway
is a big oil producer and its currency is sensitive to oil prices. Gold also
took a hit, on the basis that the agreement lessons geopolitical tensions and
risk is therefore back “on”, although it would not take much to depress the
price of gold at this juncture. Pretty much any old excuse will do.
However, it must be borne in
mind about this Iranian deal that it is, right now, an interim measure,
designed to last for six months in order for a more permanent solution to be
found. This creates lots of scope for reversals and therefore the potential for volatility in
the market. Volatility is what makes the markets tradable, so long as it is not
of the bi-directional kind and / or too extreme. Even the Krone can be seen to
be retracing late in the day yesterday (Monday).
This week also sees
Thanksgiving in the USA ,
which is next Thursday. That will create a thin market as the week progresses.
We are also approaching the end of the month, when account balancing is likely
to take place. For positions with good intrinsic value, tight stops are in
order.
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