COMMODITIES: Crude Extends Gains, Gold Rises As Geopolitical Tensions Escalate
Sep-10 18:35
- Crude prices have extended gains amid the escalation in geopolitical tensions following the shooting down of Russian drones over Poland.
- WTI spiked to an intraday high $64.08/b, before paring some of the move, after Trump sent a cryptic Truth Social post in response to the Russian drone incursion. Initial strength during the day was driven by earlier geopolitical tensions and risks of further sanctions/secondary tariffs on Russia, despite a large US crude inventory build.
- WTI OCT 25 is currently up by 1.7% at $63.7/bbl.
- Despite recent gains, the trend condition in WTI futures remains bearish. Initial resistance to watch is $66.03, the Sep 2 high. A stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low.
- Elsewhere, spot gold has risen by 0.6% to $3,648/oz, keeping the yellow metal close to yesterday’s all-time high at $3,674.3.
- Bullion has rallied ~10% since Aug 22 amid widespread expectations that the Fed will cut rates next week.
- Analysts at ANZ bank have raised their year-end gold forecast to $3,800 as they say rising risks to the labour market will likely prompt the Fed to maintain its easing stance through to March 2026.
- Gold remains in a clear bull cycle and last week’s gains plus this week’s bullish start reinforce current conditions. The next objective is $3,674.8, a Fibonacci projection, followed by $3,700 round number resistance.
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USDJPY TECHS: Shallow Bounce
Aug-11 18:30
- RES 4: 152.31 High Feb 19
- RES 3: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 2: 151.21 High Mar 28
- RES 1: 150.92 High Aug 1
- PRICE: 148.01 @ 15:30 BST Aug 11
- SUP 1: 146.70 50-day EMA
- SUP 2: 146.64 1.0% 10-dma envelope
- SUP 3: 146.62 Low Aug 5
- SUP 4: 145.86 Low Jul 24
USDJPY consolidated for much of last week, holding the bulk of the NFP losses. Price has bounced, but recoveries are shallow at this stage. This has allowed a previously overbought condition to unwind, and keeps the downside argument in focus. The recent break and close below 147.53, the 20-day EMA, is a concern. A clear break of this support zone would undermine the recent bull theme. A break of last week’s 150.92 high would resume the uptrend.
US OUTLOOK/OPINION: Rental CPI Seen Holding Pre-Pandemic Pace, Supercore To Firm
Aug-11 18:21
- Developments in travel-related services are likely to again play a role in determining the market reaction to “supercore” inflation (core services ex OER & primary rents). Supercore inflation is on balance seen firming slightly to a ‘high’ 0.2% after 0.21% M/M in June. It has been a particularly volatile measure so far this year although it has averaged only a little above a rate consistent with 2% annualized inflation at 0.20% M/M in the year to date.
- As detailed in the MNI CPI Preview (see in full here), OER inflation is seen at a similar pace to its past two months whilst primary rents could accelerate a touch after two softer months. The weighted average of the two has been at or below its average pace from 2019 (0.28% M/M) in four of the past eight months to June (averaging 0.31% M/M) and analyst expectations would see a continuation of this at 0.28% M/M. Some leading indicators point to further moderation ahead although we still caution the fact that the BLS’ quarterly New Tenants’ Rent series tends to be revised higher.
FED: White House Considering Bowman, Jefferson, Logan For Fed Chair: Bloomberg
Aug-11 18:12
Bloomberg reports, citing "two administration officials", that current FOMC members Vice Chair for Supervision Bowman, Vice Chair Jefferson, and Dallas Fed's Logan are in the running to succeed current Fed Chair Powell.
- If this is correct, the reported list has continued to grow: Bloomberg corroborates a few names ("Kevin Hassett, a close economic adviser to Trump, Fed Governor Christopher Waller, economist Marc Sumerlin and former Fed officials Kevin Warsh and James Bullard") reported by the WSJ last week and - in the case of the "Kevins" - by President Trump himself.
- Bloomberg reports that Treasury Secretary Bessent will interview candidates in the coming weeks, and Trump is set to announce Powell's successor "this fall".
- Gov Bowman is not a surprise here given her elevation to Vice Chair for Supervision this year by the White House as well as her currently dovish stance on rate policy chiming with the administration's.
- Jefferson's a bit of a surprise name in the broader context given he's a Biden appointee and has hewed pretty closely to Powell's stance on rates, which has proven unwelcome in the White House.
- That said, Logan may be the most hawkish on rates of any of the candidates yet named (note also that Dallas has an FOMC vote in 2026).
