U.S. crude has started the new trading week quietly. Currently, crude is trading at $58.82, down $0.02 or 0.04% on the day. Brent crude is trading at $65.24, up $0.34 or 0.11%. U.S. banks are closed for Martin Luther King Day, so we are unlikely to see much movement in the markets.
Markets Muted Over ‘Phase One’
The U.S. and China signed the Phase One trade agreement on Thursday at the White House. The accord marks a breakthrough in the bitter trade war, but is limited in scope and leaves many U.S. tariffs in place against China. The agreement represents a major achievement for President Trump, who described the signing in glowing terms. Critics, however, have noted that the deal does not eliminate all tariffs and does not address Chinese subsidies or Chinese theft of U.S. intellectual property, both of which are major irritants in U.S.-China trade. As well, China has committed to purchase more U.S. goods and services, but the details are being kept in a secret annex in the agreement and are not being released to the public.
Despite its shortcomings, Phase One clearly demonstrates that the sides have made progress, even if limited. President Trump has promised that talks will soon begin on ‘Phase Two’. Another dent in the trade war would be good news for both economies and could drive the price of oil higher, as the U.S. and China are the world’s largest consumers of crude.
The line of 58.75 remains fluid and is currently an immediate resistance line. Close by, the 50-EMA line is touching the candlesticks at 58.98. Above there is resistance at the round number of 60.00. On the downside, there is support at 58.00. This is followed by a support level at 57.25, which has held since December 3.
This article was originally posted on FX Empire
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