Risk event 28/08: US crude on China PMI data
With the potential long reach of the Jackson Hole meetings over the weekend, Richard Snow, analyst at Daily FX, has chosen a short trade on US crude around China manufacturing PMI data.
With the recent weakness in the Chinese economy, Richard is suggesting that the risk remains on the downside which may enable a short trade on crude oil.
(Video Transcript)
Welcome, let's take a look now at a risk event for the week starting Monday the 28th of August. It has to be said of course it's a bank holiday here in the UK but you can still trade across the IG platform. But for this now we're off to Richard Smith, analyst at Daily FX.
Chinese manufacturing PMI data
We'll look at an event next week to watch out for. Richard, welcome. What are you swinging all this around? Hi Jeremy. I'm looking ahead to Chinese manufacturing PMI data and that's on the back of fairly negative European and UK PMI data which saw oil dropping considerably lower over Wednesday and Thursday essentially.
So looking ahead to the Chinese data we'd also been seeing deteriorating conditions there and given the fact that China is assumed to be instrumental to oil growth for 2023, comprising somewhere around 60% of that figure, it could start to take an effect on oil prices particularly at a time when the US dollar and US yield remain at elevated levels.
WTI oil and potential risk
So if we take a look at the chart I'm looking at WTI oil and potential risks to the downside there over the short to medium term. As we saw with previous price action here we saw moves to the downside looking at that 77.40 a barrel level on WTI and we'd be looking for a break of this trend line support on the descending triangle as the initial trip wire for a potential move back to 77.40. Now of course we have quite a lot of event risk still to come.
Fed at Jackson Hole
We get to see a direction from the Fed at Jackson Hole but nevertheless we are looking at a potential downside risk on oil towards 77.40. Richard, thank you much indeed. Richard Snow with the Risk Event for the Week starting Monday 28th August, a day off here in the UK but you can still trade the markets across the IT platform. Richard Snow with the Risk Event for the Week starting Monday 28th August, a day off here in the UK but you can still trade the markets across the IT platform.
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