IRAN: CENTCOM Says it Redirected 12 Commercial Vessels, Disabled 1 Ship

• RES 4: 163.59 2.000 proj of the Jan 27 - Feb 9 - Feb 12 price swing
• RES 3: 163.00 Round number resistance
• RES 2: 162.28 1.764 proj of the Jan 27 - Feb 9 - Feb 12 price swing
• RES 1: 161.95 High Jul 3 ’24 and a major resistance
• PRICE: 161.56 @ 16:27 BST Jun 23
• SUP 1: 160.99 Low Jun 19 
• SUP 2: 160.27 20-day EMA 
• SUP 3: 159.43 50-day EMA 
• SUP 4: 158.74 Low May 25 

Bullish conditions in USDJPY remain intact and for now, the pair is trading just below Monday’s high. Recent gains resulted in a breach of 160.72, the Apr 30 high, to confirm a resumption of the uptrend. This paves the way for an extension towards 161.95 next, the Jul 3 ‘24 major high. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Key support is seen around the 50-day EMA, currently at 159.43. 

Thursday sees a pick-up in US data, headlined by the PCE report for May which should take precedence over the third release for Q1 national accounts published at the same time. 

• Core PCE inflation is likely to have accelerated to a particularly firm reading in the mid-0.30s% M/M in May after 0.24% M/M in April. Five latest estimates seen since the import prices release are in a range of 0.31-0.38% M/M, four of which were revised or only lifted by 1bp, whilst another two are in a narrow range of 0.35-0.36% M/M.
• A 0.35% M/M increase with no revisions would see core inflation accelerate from 3.3% to 3.4% Y/Y. We judge there to be rough consensus that core Y/Y inflation could peak in May or June but then only slowly moderate, and indeed the median FOMC forecast has just seen a marked upward revision from 2.7% to 3.3% in 4Q26. Post-import price estimates below:
  • GS: Core PCE at 0.31% M/M in May (unch on import prices), which sees 3.38% Y/Y. They also see headline at 0.45% M/M and 4.04% Y/Y, and market-based core at 0.22% M/M.
  • JPMorgan: Core PCE at 0.31% M/M in May (vs 0.30% pre-import prices), which sees 3.37% Y/Y.
  • MS: Core PCE at 0.36% M/M in May (unch on import prices) plus -1bp Apr and +3bp Jan revisions. Sees 3.44% Y/Y in May after 3.31% in April. Headline PCE seen at 0.48% M/M.
  • TD Securities: Core PCE at 0.36% M/M in May (unch on import prices), headline at 0.49% M/M and super core at 0.55% M/M.
  • Nomura: Core PCE at 0.38% M/M in May (0.345% pre-import prices), which sees 3.457% Y/Y.
• Activity will also be watched closely for a broader look at consumption strength. May's retail sales report was more solid than expected, though not particularly strong in the context of higher prices boosting nominal figures. Solidity in core nominal metrics though, particularly the control group, maintained the narrative of US consumer resilience in the face of soaring gasoline prices in Q2.
• PCE goods were tracking negative in real terms on a quarterly (3M/3M annualized) basis through April and a rough estimate of CPI-deflated series suggests a further drag here in volume terms despite 9+% 3M/3M annualized gains in control group. That doesn't mean PCE won't print solidly positive in Q2, given that services consumption is the major driver, but goods look to remain a soft spot.
• It’s worth watching the household savings rate, which in April fell to 2.6% for its lowest since the 2.2% nadir in Jun 2022 (albeit prone to large revisions).

• Crude prices have fallen today day amid signs of increased vessel flows through the Strait of Hormuz, while Hezbollah’s claim that Israel broke the ceasefire in Lebanon has so far been overlooked by Iran.
• WTI Aug 26 is down by 0.9% at $73.2/bbl.
• More ships are signalling their intention to traverse the Strait of Hormuz in a sign of easing regional tensions and growing confidence among shipowners, Bloomberg reports.
• Meanwhile, Hezbollah called the killing of two people in Israeli gunfire on a southern Lebanese town a breach of the ceasefire. Iran has said any violation of the MoU will create challenges for the peace talk process.
• A short-term bearish theme in WTI futures remains intact after the contract traded through a key support at $75.45, the April 17 low. This strengthens bearish conditions and signals scope for a move towards the $70.00 handle.
• Elsewhere, precious metals have seen significant weakness today amid a souring of risk sentiment and further upward momentum for the US dollar.
• Spot gold is down by 1.6% at $4,122/oz, while silver has fallen by 5.2% to $61.7/oz.
• For gold, a bearish theme remains intact, and a clear break of $4,099.2, the March 23 low, would highlight an important bearish development and open $4,000.0 and below.
• A bearish trend condition also remains intact for silver, with attention on $61.007 next, the March 23 low and a bear trigger.