OIL: A Hawkish Fed Would Be Seen As Negative For Oil Demand, EIA Data Out Later

The BBDXY has had a range today of 1219.55 - 1221.03 in the Asia-Pac session; it is currently trading around 1220, +0.10%. The USD opened stronger in Asia on reports the US shutdown might be ending, this saw risk and Yen-crosses gap higher on the open. The USD/JPY movement dominated the Asian session but I suspect the USD will be sold against risk currencies like the AUD & NZD and even the EUR into the London open should risk build on this initial reaction. Intra-day I suspect sellers should re-emerge back toward the 1223.50 area, the first real buy zone is back toward the 1215 area. Look for the USD to do some work and chop around within the 1215-1230 range. "SENATE HAS VOTES TO ADVANCE BILL TO END SHUTDOWN" - BBG

• EUR/USD -  Asian range 1.1542 - 1.1562, Asia is currently trading 1.1550. The pair continued to build on its support below 1.1500, I suspect rallies will now find sellers toward the 1.1650 area initially. This has been the pivot with the larger 1.1400-1.1900 range over the past few months.
• GBP/USD - Asian range 1.3137 - 1.3164, Asia is currently dealing around 1.3145. The pair continues to build on its bounce off the 1.3000 area. I continue to favor fading rallies though as GBP looks to have put in a medium term top. I suspect the 1.3250-1.3300 area is the place to fade if we see that level again. 
• Cross asset : SPX +0.70%, Gold $4050, US 10-Year 4.1340%, BBDXY 1220, Crude Oil $60.20
• Data/Events : EZ Sentix Investor Confidence

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

JGB futures are weaker and near session lows, -20 compared to settlement levels.

• "JAPAN PM TAKAICHI: NOT RULING OUT SALES TAX CUT AS OPTION IN FUTURE, BUT IMMEDIATE PRIORITY IS TO COMPILE PACKAGE OF STEPS TO CUSHION BLOW FROM RISING COST OF LIVING, CHANGING SALES TAX RATE WOULD TAKE TIME, SO DECISION ON WHETHER TO DO SO WOULD NEED TO TAKE INTO ACCOUNT WAGE, INFLATION LEVELS AT THE TIME - [RTRS]"
• MNI: BOJ board members largely agreed on the need to raise the policy interest rate eventually but saw no urgency to act at the Oct 29-30 meeting, preferring to confirm sustained wage momentum and the firmness of underlying inflation, according to the summary of opinions released Monday.
• Cash US tsys are 3-4bps cheaper in today's Asia-Pac session after headlines that key US Senate Democrats will advance a GOP bill to end the government shutdown. Risk appetite is firmer.
• Cash JGBs have bear-steepened across benchmarks, with yields flat to 3bps higher. This leaves the 2/30 curve within its well-established range ahead of tomorrow’s 30-year supply. (see chart)
• The benchmark 30-year yield is 2.6bps higher at 3.13% versus the cycle high of 3.351%.
• Swap rates are 1-3bps higher.
• Tomorrow, the local calendar will see Trade balance and Bank Lending data alongside 30-year supply.

News of an imminent end to the lengthy US government shutdown has boosted risk sentiment in Monday’s trading and thus helped to drive oil prices higher. The impasse was seen to be costly to the economy and would as a result weigh on energy demand. WTI is up 0.8% to $60.25/bbl, close to the intraday high, after falling to $59.74 early in the session. Brent is 0.7% higher at $64.08/bbl after falling to $63.60. Prices remain range bound as the market looks for new information.

• News from the US says that enough Democrats in the senate will vote to pass a bill to end the government shutdown which is in its sixth week.
• The US dollar is slightly higher while the S&P e-mini is up 0.7% and copper +1.6%.
• The market will monitor monthly reports closely this week for any deterioration in the excess supply situation. The IEA increased its 2026 surplus forecast in its October monthly report. It publishes updates on 13 November, while its annual outlook, EIA short-term energy outlook & OPEC report are out 12 November.
• The uncertain impact of additional sanctions against Russia has been providing a floor to oil prices. However, US President Trump has given Hungary a one year exemption from the US sanctions on Russia’s Rosneft and Lukoil, as “it’s very difficult for him [Hungarian PM Orban] to get the oil and gas from other areas”. According to Bloomberg, Hungary imports 90% of its oil from Russia.