Today’s release will begin with the rapidly deteriorating situation in US-China relations. Let me remind you that Donald Trump congratulated the President of Taiwan on his victory for a second term. China took this acknowledgement as an interference in their "internal affairs", which violates the policy of a single China.
In response to this move by the American president, China promises to retaliate, which will contribute to a further deterioration in relations, which is negative for the global economy and will further increase the demand for safe haven assets.
Moving to the European trading session, I will draw your attention to the release of weaker than expected inflation data from the UK which came in lower than an already pessimistic forecast. As a result, the GBP has fallen sharply, and the GBP/USD currency pair has dropped to the technical support level of 1.2220.
The future direction of the price movement will depend on the report from the Bank of England on monetary policy. Any hints the bank is prepared to cut interest rates may lead to a further selloff in the GBP. Only unexpected optimism from the Central bank head may support the pound.
During the US trading session, a report on changes in US oil reserves will be published. A further reduction should be good news for the black gold market.
Trading volatility in this market has fallen dramatically in the last few days and this may change with a surge occurring today. Unexpected growth in oil reserves may see American grade WTI fall to $30 per barrel.
I also note the upcoming publication of the minutes meeting of the US Federal Reserve. The so-called "minutes" usually increases trading activity in the US dollar. Any mention of a cut in Interest rates may see the US dollar come under pressure.
I will complete today's review with an analysis of the transaction for the purchase of the GBP/USD currency pair for one lot. The deal was opened at 1.2120, and a Stop Loss placed at 1.2090, and a Take Profit at the next strong resistance level of 1.2230, which now serves as a support. Profit on this transaction amounted to $1,100.