AUSSIE BONDS: ACGB Yield Curve A Touch Flatter, Q2 GDP Next Week

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 141.48/142.95 - High May 2 / High Apr 7
• PRICE: 137.99 @ 17:38 GMT Jul 29
• SUP 1: 137.32 - Low Jul 25
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg   
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

JGBs hold above recent lows, however a bearish theme remains intact following the reversal posted off the mid-June highs and weak demand for JGBs at auction. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, the first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal. 

Oil prices rose sharply again on Tuesday bringing gains to over 6% for the week. The move signals market worries that if Russia fails to meet the new 10 day deadline to end hostilities in Ukraine, which is clearly possible, then US measures against it and those who buy its oil could significantly impact global supplies. 

• Polymarket reported an increase in the odds of increased US sanctions on Russia by September 15 to 70%. The market reaction to the shift in the deadline for a truce is in line with this data. US President Trump appears not concerned about the impact suggesting the US will increase its oil output.
• Former Russian President Medvedev said that Trump’s “ultimatums” were a “step towards war”, per Russian state media. The Kremlin was clear that it is going to ignore the deadline.
• WTI rose 3.8% to $69.25/bbl after a high of $69.76 leaving the benchmark up 6.3% this week and 8.5% in July. It broke above resistance at $69.41 but the move wasn’t held. Initial support is at $64.85. If the break is sustained, then the next level to watch is $79.40, 23 June high. Prices have started Wednesday around $69.29.
• Brent was 3.9% higher at $72.76/bbl, above initial resistance at $72.66, also to be up 6.3% this week and 9% this month. It reached a high of $73.08.
• Bloomberg reported that there was a crude stock build of 1.5mn barrels last week in the US, according to people familiar with the API data. In terms of products, gasoline fell 1.7mn barrels while distillate rose 4.2mn. The official EIA data is out on Wednesday.

The overnight range was 148.16 - 148.81, Asia is currently trading around 148.50. USD/JPY consolidated on a 148 handle as the USD shorts remain under pressure heading into an important data week for risk. A move back above the highs for July would turn the focus towards the pivotal 151.00/152.00 area.

• MNI JAPAN: LDP Confirms General Assembly That Could Decide PM Ishiba's Fate. The governing Liberal Democratic Party (LDP) confirmed on 29 July that its executive committee will call a General Assembly of LDP members of the National Diet 'in the near future'. This could prove pivotal for the tenure of PM Shigeru Ishiba following the disastrous performance of the LDP in the 20 July House of Councillors election.
• Bloomberg - “USD/JPY is approaching this week’s BOJ meeting with the pair heading back toward the 152 area it held when the central bank raised interest rates in July 2024, writes Bloomberg News’ Mark Cranfield. Although the central bank is mulling another rate hike for this year, the tortuous process of getting there means that few investors are prepared to be aggressively long yen.”
• Options : Close significant option expiries for NY cut, based on DTCC data: 146.65($823m).Upcoming Close Strikes : 149.00($1.16b July 30), 147.00($1.52b Aug 1), 146.00($1.43b Aug 1) - BBG.
• CFTC data shows Asset managers surprisingly added slightly to their JPY longs +72326( Last +71610), while leveraged funds have slightly reduced their newly built short JPY position -11571(Last -12606).
• Data/Event : 

Fig 1 : USD/JPY Spot Daily Chart

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