OIL: Better Risk Tone & Technicals Drive Crude Recovery
Mar-11 22:09
Oil prices recovered a large share of Monday’s losses trending higher through most of the day supported by indications they were oversold and a step back from an escalation of the US-Canada trade war which boosted risk assets. While Ukraine agreed to a truce and US & OPEC supply is expected to rise, the US Energy Secretary said that sanctions on Iran will be enforced. The USD index fell 0.4%.
- WTI is 0.9% higher at $66.62/bbl after moving above $67.00 briefly to make a high of $67.17 but then it fell back to around $66.00. It has started today down slightly at $66.52. The trend remains bearish with a clear breach of support at $70.20 opening up $63.61, key medium-term support. Short-term pivot resistance is at $70.36, 50-day EMA.
- Brent rose to an intraday high of $70.44 but then trended lower breaking below $69.50. It finished up 0.9% to $69.90/bbl. There continues to be a bearish price sequence of lower lows and lower highs. Initial support is at $68.33 and resistance at $71.92.
- Bloomberg reported that US crude inventories rose 4.2mn barrels last week after a drawdown the previous week, according to people familiar with the API data. At Cushing they fell 1.2mn barrels though. Gasoline stocks were down 4.6mn while distillate rose 400k. The official EIA data is out later today.
- Ukraine agreed to a US proposal for a 30-day ceasefire and now the US will begin negotiations with Russia for their agreement. The US administration has been working on a plan to ease sanctions on Russia, while Europe continues to consider ways to become less reliant on its fossil fuels.
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BONDS: NZGBS: Cheaper With US Tsys After US Payrolls Data
Feb-09 22:07
In local morning trade, NZGBs are 4-5bps cheaper after US tsys were pressured following Friday’s US Employment Report for January.
- US tsys gapped richer after lower-than-expected jobs gains for January, and a small dip in the unemployment rate -- but quickly reversed on robust two-month net revisions along with a smaller-than-expected benchmark revision.
- Wage growth meanwhile surprisingly accelerated but against a notable caveat of average weekly hours sliding to lows last seen in the depths of the pandemic and mid-2010 (that’s despite the BLS saying adverse weather played no impact).
- Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday. Trump didn't announce a time when these tariffs will take effect.
- Swap rates are 4-6bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing is little changed. 49bps of easing is priced for February, with a cumulative 122bps by November 2025.
- Today, the local calendar is empty. The next event is a State of the Economy presentation by Treasury Chief Economic Adviser Dominick Stephens on Wednesday. The next data release is Card Spending on Thursday.
ASIA: Government Bond Issuance Today.
Feb-09 22:03
- Bank of Thailand to Sell THB60bn of 91-Days Bills
- Thailand to Sell THB30bm of 181-Days Bills.
- Taiwan to Sell NT$30 Billion 10-Year Bonds
- Philippines To Sell PHP 7.0Bln 91D Bills (PH0000058562)
- Philippines To Sell PHP 7.0Bln 182D Bills (PH0000059149)
- Philippines To Sell PHP 8.0Bln 364D Bills (PH0000059917)
- Bank of Korea to Sell KRW500bn 91-Day Bonds
- South Korea to Sell KRW3tn Won 3-Year Bonds
JPY: USD Bid On Trump Tariff Headlines, AUD Underperforms Yen
Feb-09 21:52
The USD is better bid post earlier tariff headlines from US President Trump, which stated that the US will impose 25% tariffs on all imports of steel and aluminium from Monday (when they will kick in wasn't specified), per Bloomberg.
- AUD/USD is the weakest performer, back to 0.6235/40, off close to 0.60% versus end Friday levels. NZD/USD is down more modestly, last near 0.5640 (off 0.30%). At face value given Australia's iron ore, coking coal exports, such a tariff would impact Australia more than New Zealand.
- For AUD, downside focus will rest at 0.6171 the Feb 4 low.
- EUR/USD is off 0.45% to 1.0280, although liquidity may still be lighter for this pair. The Feb 4 for this pair at 1.0272 isn't far away. CAD is off 0.45%, NOK down 0.55%, but again liquidity is likely to be a factor.
- USD/JPY is little changed in latest dealings, last near 151.40/45, so outperforming from a safe haven status stand point.
