OIL: Crude Continues August Decline, Doubts US Can Restrict Russian Oil
Oil prices fell again on Tuesday and are now down over 5% in August. The market believes there will be a deal between Russia and the US over Ukraine and if not, US tariffs won’t be able to stop the shipment of Russian crude any way. There is talk of a ceasefire in the air but Russia is considering its choices. The market is widely expected to face excess supply as OPEC raises output and a major US shale operator is cutting investment.
- WTI fell 1.7% to $65.17/bbl after reaching a low of $65.03. The benchmark is now down 5.9% this month. It is currently around $65.21, below the 50-day EMA at $65.48. The bear trigger is at $62.84.
- Brent is 1.4% lower at $66.54/bbl after falling to $66.41 and is now down 5.1% in August. It continued to trade below the 50-day EMA at $68.05 opening $65.06, 30 June low.
- US President Trump reiterated that if there isn’t a truce in Ukraine by August 8 the US will increase restrictions on Russia, including sanctioning its shadow fleet, and add tariffs on those who purchase its oil. He has been targeting India but PM Modi is not bowing to the pressure. China has also now been mentioned.
- In July, Trump said that tariffs of around 100% could be imposed but on Tuesday he said he wouldn’t name a figure. He also noted that US special envoy Witkoff was in Russia on Wednesday and is waiting to see what comes out of his meetings.
- Bloomberg reported that US oil inventories fell a more-than-expected 4.2mn last week, according to people familiar with the API data. Gasoline stocks fell 900k while distillate rose 1.6mn. The official EIA data is out later today.
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NZD: NZD/USD - Consolidates Around 0.6050, Eyes Tariff Deadline
The NZD/USD had a range Friday night of 0.6050 - 0.6079, Asia is trading around 0.6055. The NZD/USD drifted lower for most of the session as stocks pared back some of its recent gains as the market eyes the tariff deadline approaching this week. Look for more consolidation again in the NZD/USD as the pair continues to build a base from which to move higher. The risk to this is clearly around President Trump escalating trade tensions this week, which could make it a choppy week.
- (Bloomberg) -- Finance Minister Nicola Willis is seeking advice on how much tax local banks are paying, the NZ Herald reports, citing an interview. Says work to enhance banking competition is wide-ranging and as part of this, she has sought advice on whether the major banks are paying their fair share of tax
- “I’ve been interested in how New Zealand’s bank tax regime compares with Australia and elsewhere, particularly in light of the significant profits Australian banks make from Kiwi customers”
- A huge bounce from sub 0.5900 and the NZD has now established a foothold above 0.6000, with the USD breaking lower the NZD/USD looks to be building for a potential break higher of its own. A clear break of 0.6100 could provide the momentum to begin a larger move higher, initially targeting the 0.6400/0.6500 area. The tariff deadline this week does add some risk to this view.
- First support is towards 0.6000 then more importantly the 0.5850/0.5900 area.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6075(NZD519m July 9), 0.6000(NZD407m July10).
- Data/Event : RBNZ - Wednesday
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Philippines To Sell PHP 7.0Bln 91D Bills (PH0000059370)
- Philippines To Sell PHP 8.5Bln 182D Bills (PH0000059784)
- Philippines To Sell PHP 9.5Bln 364D Bills (PH0000060667)
ASIA: Coming Up in Asia Today
| Indonesia Foreign Reserves JUNE | 4:00 | 11:00 | 13:00 |
| Thailand CPI YoY JUNE | 4:30 | 11:30 | 13:30 |
| Thailand CPI NSA MoM JUNE | 4:30 | 11:30 | 13:30 |
| Thailand CPI Core YoY JUNE | 4:30 | 11:30 | 13:30 |
| Malaysia Foreign Reserves JUNE | 8:00 | 15:00 | 17:00 |
| Hong Kong Foreign Reserves JUNE | 9:30 | 16:30 | 18:30 |
| Singapore Foreign Reserves JUNE | 10:00 | 17:00 | 19:00 |
source: Bloomberg Finance LP / MNI
