OIL: Crude Range Trading Ahead Of Key Events, FOMC Minutes Later
Oil prices are moderately higher today after falling around 0.7% on Tuesday. They are range trading as the market waits for key US data on Friday and the outcome of OPEC’s May 31 meeting. WTI is up 0.5% to $61.20/bbl after a high of $61.43, while Brent is 0.5% higher at $64.40/bbl off the intraday low of $64.32. The US dollar continues to strengthen with the USD index up 0.15%.
- With OPEC expected to increase output again in July adding to global excess supply, attention will remain on US inventory data with industry-based figures out later today and the official EIA report on Friday, delayed because of Monday’s US holiday which marked the start of the driving season. Gasoline demand will be especially monitored during this time.
- OPEC’s Joint Ministerial Monitoring Committee meets virtually today to discuss quotas for July and then a smaller group led by Saudi Arabia will decide on May 31.
- It seems that sanctions on Russia’s fossil fuel exports are not only going to stay but may tighten with Europe already increasing restrictions and considering others, while the US is also seriously thinking about adding to its list. Russian attacks on Ukraine have intensified despite calls for a truce.
- Later the Fed’s Williams and Kashkari speak as well as the May FOMC meeting minutes are released. US May Richmond & Dallas Fed indices as well as German April unemployment and French April consumption are released. BoE’s Pill also speaks.
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ASIA STOCKS: A Positive Regional Day ahead of Earnings
The focus this week will be on major China bank earnings as investors see if tariffs are impacting companies yet as markets show signs that the tariff threats may not be the driving forces in the week ahead. With over 400 companies reporting this week, investors will be looking for firsthand evidence that the trade war is impacting profitability.
As the press conference in China reiterated its commitment to jobs and support to the economy the government indicated that contingency plans are in place and that they remain 100% confident of achieving 5% economic growth.
- China’s major bourses were mixed today with the Hang Seng barely gaining up +0.07% whilst the CSI 300 was flat. Shanghai was down -0.03% and Shenzhen -0.72%.
- The KOSPI had a quiet start to the week in a week with significant data releases, rising just +0.16%.
- The FTSE Malay KLCI rose +0.65% to add to last week’s modest gains.
- The Jakarta Composite was up +0.72% today following on from last week's strong week where it gained +3.74%.
- In Singapore, the FTSE Straits Times was down -0.43% whilst the PSei in the Philippines rose +0.39%.
- India’s NIFTY 50 is up +0.90% in Monday’s trading, following on from last week’s poor end to the week with losses on Thursday and Friday
BONDS: NZGBS: Bull-Flattener As Local Market Plays Catch-Up
NZGBs closed showing a bull-flattener, with benchmark yields 4-9bps lower.
With the local calendar empty, today’s moves reflected US tsys’ strong close to last week. The local market was closed on Friday for the ANZAC Day holiday.
- Cash US tsys are little changed in today's Asia-Pac session. GDP, ISM Manufacturing and NFM payrolls are the main events in this week’s US calendar. Trump’s first 100 days in office speech is tomorrow.
- “RBNZ increased its foreign currency intervention capacity to a record NZ$26.7b at the end of March as it sold New Zealand dollars.” (per BBG)
- The NZ economy will expand 0.5% q/q in 1Q, according to the latest results of a Bloomberg News survey. The RBNZ’s OCR is forecast to drop from 3.50% to 3.25% by end-2025.
- Swap rates closed 4-6bps lower, with 2s10s curve flatter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 27bps of easing is priced for May, with a cumulative 82bps by November 2025.
- Tomorrow, the local calendar will see Filled Jobs data and a Pre-Budget speech from Finance Minister Willis.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
FOREX: G10 Wrap - USD Has A Quiet session
The BBDXY has had an Asian range of 1225.84 - 1227.93, Asia is currently trading around 1226. The headlines from the PBOC press conference aimed at stabilizing the economy and supporting the jobs market didn’t shift market sentiment greatly. It still appears more monetary stimulus is on the way, but the authorities will enact such moves in a timely manner. Bloomberg - “ECB: Klaas Knot told FD the June meeting will be “really complicated” due to uncertainty over US tariff policy and European fiscal plans."
- EUR/USD - Asian range 1.1340 - 1.1367, Asia is currently trading 1.1363. Intra-day support is around 1.1300, should this area not hold demand should remerge on dips back to 1.1100.
- GBP/USD - Asian range 1.3280 - 1.3312,the market seems happy to accumulate GBP on dips but the risk of a short-term retracement remains. Buyers should reemerge back towards the 1.3000/3100 area.
- USD/JPY - Asian range 143.35 - 143.88, has traded sideways for most of the Asia session. On the day the 143 handle should still see some supply, then more importantly the 145/146 area should once more offer good levels for sellers to reengage.
- USD/CNH - Asian range 7.2878 - 7.2986, the USD/CNY fix printed at 7.2043. USD/CNH continues to trade sideways and find support towards 7.2800, as it weakens in the crosses.
- Cross asset : SPX -0.52%, Gold $3293, US 10yr 4.23%, BBDXY 1226, Crude oil $63.31.
Data/Events : Spain Unemployment, Retail sales, ECB’s Guindos and Rehn Speak, US April Dallas Fed Manufacturing Activity.
Fig 1: EUR/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
