OIL: Crude Slightly Lower, Watching Developments Against Russian Crude Buyers
Oil prices are only slightly lower today holding onto the significant gains made this week in the face of US President Trump’s threats against Russia and those who buy its fossil fuels. WTI reached a high of $70.41/bbl early in the APAC session but has trended lower since to be down 0.2% to $69.87. Brent is 0.3% lower at $73.05/bbl after a peak of $73.53. The USD index is down 0.2%.
- More US trade deals have been announced with India to face 25% tariffs plus an unspecified “penalty” for buying Russian oil and weapons, Brazil 50% for policies that threaten US security, while South Korea’s will be 15% in line with Japan and the EU. President Trump said today that India’s 25% was too high and so that doesn’t seem the final rate.
- With India to currently be penalised for buying Russian oil, the market is nervous that US restrictions particularly on third parties could materially impact global supplies. OPEC meets on August 3 to decide its production target for September and while another increase is widely expected, it has limited capacity to make up for any loss of Russian output.
- The US also increased restrictions on Iran targeting the shipping network and companies of Hossein Shamkhani. The EU sanctioned his business interests last week. His vessels are said to transport goods and oil from Russia and Iran around the world.
- Later US June PCE spending/prices, July Challenger job cuts, Q2 employment cost index, jobless claims and MNI July Chicago PMI are released. Also, July France/Germany CPI and June euro area unemployment print.
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BOBL TECHS: (U5) Support Remains Intact For Now
- RES 4: 118.649 1.382 proj of the May 21 - Jun 3 - Jun 5 swing
- RES 3: 118.531 1.236 proj of the May 21 - Jun 3 - Jun 5 swing
- RES 2: 118.390 High Jun 13 and a bull trigger
- RES 1: 118.065 61.8% retracement of the Jun 13 - 16 downleg
- PRICE: 117.740 @ 05:50 BST Jul 1
- SUP 1: 117.530 Low Jun 5 and a key near-term support
- SUP 2: 117.470 Low May 21
- SUP 3: 117.470 Low May 21
- SUP 4: 116.660 Low Mar 27
Bobl futures are unchanged and continue to trade in a range. A bull cycle remains intact, however, the latest pullback has exposed key short-term support at 117.530, the Jun 5 low. A break of this level would highlight a stronger reversal and cancel the bull theme. This would open 117.470, the May 21 low. Key short-term resistance has been defined at 118.390, the Jun 13 high. Clearance of this level would be a bullish development.
EURUSD TECHS: Northbound
- RES 4: 1.1923 2.000 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1851 High Sep 10 2021
- RES 2: 1.1821 High Sep 16 2021
- RES 1: 1.1807 Intraday high
- PRICE: 1.1786 @ 06:09 BST Jul 1
- SUP 1: 1.1631 High Jun 12 and a recent breakout level
- SUP 2: 1.1554 20-day EMA
- SUP 3: 1.1446 Low Jun 19
- SUP 4: 1.1389 50-day EMA
The trend set-up in EURUSD remains bullish and the pair continues to appreciate. Last week’s gains resulted in a breach of resistance and a bull trigger at 1.1631, the Jun 12 high. This confirms a resumption of the trend. The 1.1800 handle has been pierced, sights are on 1.1821, the Sep 16 2021 high. Key short-term support to watch lies at 1.1554, the 20-day EMA. A clear break of this average is required to signal scope for a deeper retracement.
AUSSIE BONDS: Richer On A Data-Light Session, US JOLTS & ISM Manf Data Due Today
ACGBs (YM +3.0 & XM +5.0) are trading moderately stronger on another relatively subdued data-light Sydney session.
- Cash US tsys are 1-2bps richer, with a flattening bias, in today's Asia-Pac session, extending yesterday's bull-flattener. Today’s US calendar: S&P Global US Man PMI, Wards Total Vehicle Sales, ISM Manufacturing, Construction Spending, JOLTS, Dallas Fed Services Activity.
- Top U.S. trade officials are now seeking narrower agreements with other countries to secure deals before President Donald Trump's July 9 tariff deadline, the Financial Times reported on Tuesday, citing people familiar with the talks.
- The cash 10-year is 5bps richer, with the AU-US 10-year yield differential at -9bps.
- The bills strip is slightly mixed, with flat to +3.
- RBA-dated OIS pricing is flat to modestly softer across meetings today. A 25bp rate cut in July is given a 95% probability, with a cumulative 83bps of easing priced by year-end (based on an effective cash rate of 3.84%).
- Tomorrow, the local calendar will see Building Approvals and Retail Sales data.
- This week, the AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond tomorrow and A$1000mn of the 2.25% 21 May 2028 bond on Friday.
