OIL: Crude Holds Most Of Yesterday’s Gains But Worried About Trade Again
Oil has held onto most of Wednesday’s gain declining only slightly during today’s APAC session. WTI is down 0.3% to $67.92/bbl following a low of $67.62, while Brent is -0.4% to $69.49/bbl after falling to $69.22, back below resistance at $70.08. The USD index is down 0.3% providing some support to dollar-denominated crude.
- Oil prices surged on Wednesday driven by the lower-than-expected May US CPI, likely US-China trade deal, a large US crude drawdown and rising geopolitical tensions in the Middle East. The US has reduced staff at its Iraqi embassy in the face of threats from Iran to attack US bases in the Middle East if there is a conflict.
- While President Trump doesn’t think he can persuade Iran to give up on its nuclear ambitions, talks are due to continue in Oman on Sunday. Iran is believed to be preparing a new proposal ahead of the summit. An easing in tensions would likely see a material decline in oil prices.
- The market is focusing on trade tensions again, which it has feared for some time would weigh on global energy demand. Trump said that tariff letters with unilateral duties would be sent in the next fortnight, which has increased trade nerves. The current delay ends on July 8.
- US May PPI & jobless claims and UK April IP/GDP print. ECB’s de Guindos, Schnabel and Elderson speak.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURUSD TECHS: Pierces The 50-Day EMA
- RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1608 High Nov 9 2021
- RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- RES 1: 1.1256/1381 20-day EMA / High May 2 - 6
- PRICE: 1.1110 @ 05:55 BST May 13
- SUP 1: 1.1082/65 50-day EMA and a pivot level / Low May 12
- SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 3: 1.0943 Low Apr 10
- SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle
EURUSD maintains a softer tone and the pair traded sharply lower Monday. Recent weakness appears corrective and key trend signals remain bullish. However, the pair has breached the 20-day EMA and pierced 1.1082, the 50-day EMA. A clean break of the average would strengthen a bear threat. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction.
AUSSIE BONDS: Heavy Session As ACGBs Track Global Bonds
ACGBs (YM -11.0 & XM -7.5) are weaker and hovering near Sydney session lows.
- NAB business conditions fell 1 point from a month earlier to 2 in April, the lowest since August 2020.
- Cash US tsys are ~2bps richer in today's Asia-Pac session after yesterday's heavy session sparked by news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
- Cash ACGBs are 7-10bps cheaper with the 3/10 curve flatter and the AU-US 10-year yield differential at -3bps.
- The bills strip has bear-steepened, with pricing -3 to -11.
- RBA-dated OIS pricing is 2-11bps firmer today with late 2025/early 2026 leading. This leaves meeting pricing 4-35bps firmer than levels before the release of Q1 CPI data on April 30. A 25bp rate cut in May is currently given a 96% probability, with a cumulative 82bps (117bps before the CPI data) of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow, the local calendar will see Q1 Wage Price Index and Home Loans data.
- AOFM plans to sell A$1200mn of the 3.50% 21 December 2034 bond tomorrow and A$800mn of the 2.50% 21 May 2030 bond on Friday.
BUND TECHS: (M5) Bear Cycle Extends
- RES 4: 133.00 round number resistance
- RES 3: 132.56 High Feb 28 and a key resistance
- RES 2: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger
- RES 1: 130.57/85 50- and 20-day EMA values
- PRICE: 129.60 @ 05:31 BST May 13
- SUP 1: 129.59 Low May 12
- SUP 2: 129.28 50.0% retracement of the Mar 11 - Apr 7 rally
- SUP 3: 129.02 Low Apr 10
- SUP 4: 128.60 Low Apr 9 and a key support
For now, the latest move down in Bund futures is considered corrective. This correction remains intact and the contract has traded through support at the 50-day EMA, at 130.57. This signals scope for a deeper retracement and Monday’s extension strengthens the current bearish threat. A continuation lower would open 129.28, a Fibonacci retracement. Initial resistance to watch is 130.85, the 20-day EMA.
