With Japan still on holiday and no major economic data scheduled in Asia, it looked like we were on track for another quiet session. But U.S. President Donald Trump had other plans.
A missile attack at a Baghdad airport killed seven pro-Iranian security officials. An Iraqi militia spokesman confirmed that Iranian Major-General Qassem Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis.
U.S. officials and the Pentagon confirmed the U.S. was responsible for the attack, while reports surfaced that U.S. Navy Seals had also captured pro-Iran militia commanders in Iraq. And, if that were not enough confirmation, Trump tweeted a picture of the American flag.
As you’d expect, oil prices spiked on supply concerns and, at its high, had rallied over 4%. Gold also followed suit and hit its highest level since September.
The repercussions from today’s events are yet to be seen but, given the seniority of the leaders killed and detailed, they’re not likely to be small. One pundit was quoted saying, “I’m not sure Donald Trump realizes what he’s unleashed,” which could be putting it mildly.
Today’s spike has taken WTI break out of its bullish channel and print an intraday high above $64. Yet, with prices having retreated below 63.38 resistance, more information may need to come to light before to help decide which side of this key level WTI closes on. If tensions escalate and it appears there will be a squeeze on the oil supply, then we could find prices rebound back above $64 with relative ease. Yet, if the response is somehow muted (unlikely at this stage) we could be looking a sharp reversal and for WTI to leave bearish hammer in its wake.
- A break above 64 brings the 66.60 high into focus
- A daily close