OIL: Crude Continues Trending Lower To Be Down Almost 3% This Week
Jan-23 04:34
Oil has continued to trend lower during APAC trading today as the market worries about the impact a trade war would have on demand. There is also likely to be an increase in US output. Brent is down 0.3% to $78.73/bbl, close to the intraday low, and WTI 0.4% lower at $75.17/bbl just above support at $75.05 (Wednesday’s low). The USD index is flat.
- The first part of US President Trump’s Fox interview focused on domestic issues with the second part due to air later today to be about foreign policy.
- Tightened sanctions on Russian crude has increased its shipping costs and boosted demand for oil from other suppliers especially Middle Eastern, thus pushing up prices from that region. As a result, some Asian refineries are looking to reduce output due to narrower margins.
- EIA US inventory data print later. Bloomberg reported earlier that there was a US crude inventory build of 1mn barrels last week, according to people familiar with the API data. Products also continued to rise with gasoline up 3.2mn and distillate 1.9mn. There could be a number of weeks of higher inventories as both Canadian producers and US refiners sharply front load supplies ahead of threatened 25% tariffs from February 1.
- Later US jobless claims, January Kansas Fed manufacturing, Canadian November retail sales and preliminary January euro area consumer confidence print.
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FOREX: USD Modestly Higher, Yen Pares Losses Post FinMin Warning
Dec-24 01:35
Early G10 FX trends are skewed towards the USD, albeit with modest moves overall. AUD and NZD are seeing some slight underperformance (which followed some outperformance on Monday). Rhetoric around FX moves has crossed from the Japan FinMin as well.
- The reaction so far from USD/JPY has been limited. We were last 157.15/20, close to unchanged for the session. Earlier highs were at 157.39.
- Japan FinMin Kato reiterated recent concerns on FX - "JAPAN FINMIN KATO: CONCERNED ABOUT RECENT FX MOVES, RTRS" "JAPAN FINMIN KATO: RECENTLY SEEING ONE-SIDED, SHARP FX MOVES" and that the authorities will take action against excessive moves.
- USD/JPY is still sub post BoJ highs (157.93), with these comments highlighting intervention risks as we approach the holiday period. Earlier the BoJ minutes from the Oct policy meeting came and went with little market reaction.
- AUD/USD sits down around 0.20%, last near 0.6235/40. Downside focus will rest on the 0.6199 low seen recently. The RBA minutes from the Dec meeting were out earlier. Upside risks to inflation have diminished but it was still too soon to be confident that inflation is sustainably at target.
- NZD/USD is also lower, last near 0.5635/40. Also, still up from recent cycle lows.
- Trends are biased in favour of the USD elsewhere, but aggregate moves are modest. In the cross asset space, US equity futures are down a touch, along with US yields, but again overall moves are modest.
- There is little in the way of further risk events for the remainder of today's Asia Pac session.
CHINA: Central Bank Drains Liquidity via OMO.
Dec-24 01:27
- PBOC issues CNY64.1bn of 7-day reverse repo.
- Today’s maturities CNY355.4bn
- Net Liquidity withdrawal CNY291.3bn.
- The PBOC controls liquidity in the interbank market through the daily issuance of reverse repo.
MNI: CHINA PBOC CONDUCTS CNY64.1 BLN VIA 7-DAY REVERSE REPOS TUES
Dec-24 01:24
- CHINA PBOC CONDUCTS CNY64.1 BLN VIA 7-DAY REVERSE REPOS TUES
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