OIL: Crude Breaks Resistance But Then Moderates As Waits For Trade News

The NZD had a range Friday night of 0.5885 - 0.5921, Asia is opening around 0.5920. US Stocks and risk are opening on a real positive note as US-China officials are citing 'substantial progress' made from weekend trade talks held in Switzerland.

• This has seen the USD open up higher in Asia particularly against the EUR and the JPY. The AUD and NZD though are both benefitting from the positive statements and it will be interesting to see if Asia can build on what is just rhetoric at this stage.
• The NZD traded sideways for most of Friday as the market awaited the outcome of the weekend meeting. The NZD did find decent demand sub 0.5900 on its initial look down there.
• On the day there is potential for NZD to continue to outperform as the market digests an outcome that many thought not possible. How far can it move though without any real concrete evidence of a trade deal being shown.
• First support is right here around the 0.5900 area but more importantly the support around 0.5800 needs to hold to keep the bulls in the drivers seat.
• CFTC Data showed little movement, with Asset managers adding very slightly to their shorts and the leveraged community slightly reducing their own short.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.960 - High Apr 7 
• PRICE: 95.730 @ 15:22 BST May 7
• SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.819 - 1.0% 10-dma envelope

Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.

TYM5 reopens at 110-17, down 0-09 from closing levels in today’s Asia-Pac session. This on the back of US-China officials citing 'substantial progress' made from weekend trade talks held in Switzerland.

• Overnight US 10-year yields had a range of 4.3433% - 4.3961%, closing around 4.375%. 
• Treasury yields ended mixed overnight, the short end moving higher resulting in the yield curve flattening.(2s10s -1.30 at 48.540).
• Dollar swap spreads widened for a third straight day, extending the move that began Wednesday after Treasury Secretary Bessent said SLR reform is a ‘high priority.(BBG)
• NY Fed President Williams said there was no hurry to cut rates, echoing a similar stance to Chairman Powell after Wednesday's FOMC announcement.
• The 10-year Yield range seems to be 4.10% - 4.5%, price has bounced nicely off the 4.25/30 support, target back towards the top end of the range 4.45/50%.