OIL: Crude Higher Again, US Inventory Data Out Later
Oil prices are higher today supported by US industry data showing a large crude drawdown and the upcoming August 8 deadline for a truce in Ukraine otherwise purchasers of Russian fuel will be hit by extra US tariffs. Crude is down over 5% in the first three trading days of the month. WTI is 0.6% higher at $65.54/bbl following a high of $65.63. Brent is up 0.6% to $66.90/bbl after reaching $66.94. The USD index is down 0.1%.
- Markets believe that even if there isn’t a US-Russia agreement, that it will be very difficult to reduce Russian fuel shipments materially. US special envoy Witkoff is scheduled to be in Russia today for meetings.
- Daily Russian product exports declined around 4% in July from June to their lowest in nine months based on Vortexa data compiled by Bloomberg. Refining rates are down and summer has driven an increase in domestic consumption. Russia has stopped gasoline exports for now.
- 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 and will be monitored for signs of weakening demand.
- Later the Fed’s Cook, Collins and Daly speak. Euro area June retail sales, June German factory orders and French Q2 employment print.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 07-Jul | 0700 | DE | Industrial Production |
| 07-Jul | 1000 | EU | Retail Sales |
| 07-Jul | ---- | EU | ECB Lagarde and Cipollone In Eurogroup Meeting |
| 08-Jul | 0700 | DE | Trade Balance |
| 08-Jul | 0745 | FR | Foreign Trade |
| 08-Jul | ---- | EU | ECB de Guindos At ECOFIN Meeting |
| 09-Jul | 1145 | EU | ECB Lane At House of the Euro |
| 09-Jul | 1200 | EU | EC De Guindos Closing Remarks At Conference |
| 10-Jul | 0700 | DE | HICP (f) |
| 10-Jul | 0800 | EU | ECB Cipollone Digital Euro Lecture |
| 10-Jul | 0900 | IT | Industrial Production |
| 11-Jul | 0745 | FR | HICP (f) |
| 11-Jul | 1230 | EU | ECB Cipollone At Ukraine Recovery Conference |
| 15-Jul | 0800 | ES | HICP (f) |
| 15-Jul | 1000 | EU | Industrial Production |
| 15-Jul | 1000 | DE | ZEW Current Expectations Index |
EURUSD TECHS: Trend Needle Points North
- RES 4: 1.1954 2.0% 10-dma envelope
- RES 3: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1851 High Sep 10 2021
- RES 1: 1.1829 High Jul 01
- PRICE: 1.1767 @ 06:15 BST Jul 7
- SUP 1: 1.1708 Low Jun 30
- SUP 2: 1.1630 20-day EMA
- SUP 3: 1.1575 Low Jun 24
- SUP 4: 1.1447 50-day EMA
The trend condition in EURUSD remains bullish with price trading closer to its recent highs. Moving average studies are in a bull-mode position highlighting a clear uptrend and note too that corrections, when they do occur, have been shallow. This reinforces the trend condition. A resumption of gains would signal scope for a climb towards 1.1851, the Sep 10 2021 high. Key short-term support to watch lies at 1.1630, the 20-day EMA.
JGBS: Sharp Bear-Steepener, Fiscal Expansion Fears, 5Y Supply Tomorrow
JGB futures are little changed, -2 compared to settlement levels.
- Japan’s leading economic indicator was at 105.3 in May versus 104.2 in April.
- Bloomberg - "Japanese Prime Minister Shigeru Ishiba said the country is prepared for all possible tariff scenarios, speaking on Fuji TV's "Sunday News The Prime" program. Japan is ready to "stand firm" and defend its interests while anticipating every possible situation, says Ishiba."
- Cash US tsys are flat to 3bps richer in today's Asia-Pac session after resuming trading following the long weekend.
- (Bloomberg) The Treasury's willingness to fund more at the short end of the yield curve will further compromise the Federal Reserve's independence and increasingly leave monetary policy de facto in fiscal hands.
- Cash JGBs are -1bp richer to 8bps cheaper across benchmarks, with a steeper curve. The benchmark 5-year yield is 0.2bp higher at 0.973% ahead of tomorrow's supply.
- (Bloomberg) -- Ryutaro Kimura, senior fixed income strategist at AXA Investment Managers, said that fiscal expansion worries have weighed on Japanese government debt since the 30-year bond auction on July 3, and super-long-term bonds have sold off sharply.
- The swaps curve has bear-steepened, with rates flat to 5bps higher.
- Tomorrow, the local calendar will see Trade Balance and Bank Lending data alongside 5-year supply.
