OIL: Crude Stabilises After Yesterday’s Losses, Monitoring Range Of Issues
After falling over a percent on Wednesday, oil prices are slightly higher during today’s APAC session. WTI is up 0.2% to $61.68/bbl, close to the intraday high, while Brent is up 0.1% to $64.95/bbl. Markets continue to worry about and monitor Russia & Iran developments, OPEC production plans, US demand and trade negotiations.
- The USD index is down 0.1% today to be down 1.2% this week which has likely supported dollar-denominated crude in a weaker risk sentiment environment. Markets are concerned by the US’ fiscal outlook.
- US Secretary of State Rubio said that licences to export oil from Venezuela would expire on May 27 as planned when a 60-day extension had been expected. This will impact Chevron significantly as it has produced around 20% of Venezuela’s oil recently, according to Bloomberg.
- Europe increased sanctions this week on Russian financial intermediaries and tankers headed to China and the UK now wants the price cap on Russian crude reduced. The US is currently hesitant to follow with Trump saying that tighter restrictions will be counterproductive but a WSJ report is suggesting that he did tell European leaders after his call with Putin that he believed that Russia is not yet ready for peace.
- Later the Fed’s Barkin & Williams, ECB’s de Guindos & Elderson and BoE’s Pill, Breeden & Dhingra speak. The ECB’s April meeting accounts are published. US April Chicago Fed, existing home sales, May flash PMIs, Kansas Fed manufacturing and jobless claims print as well as European May PMIs.
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BOBL TECHS: (M5) Trend Needle Points North
- RES 4: 120.20 High Dec 12 ‘24 (cont)
- RES 3: 120.000 Psychological round number
- RES 2: 119.960 High Apr 7 and the bull trigger
- RES 1: 119.660 Intraday high
- PRICE: 119.610 @ 05:55 BST Apr 22
- SUP 1: 119.030 Low Apr 17
- SUP 2: 118.595 20-day EMA
- SUP 3: 18.060 Low Apr 10
- SUP 4: 117.680 Low Apr 9 and a key support
Bobl futures traded higher last week and the contract is holding on to its latest highs. Recent weakness appears corrective and a bullish theme remains intact. The early April rally resulted in a break of key resistance at 119.040, the Feb 28 high. This strengthens bullish conditions. The focus is on the 120.000 handle next. Firm support lies at 117.680, the Apr 9 low. The 20-day EMA, an important short-term support, is at 118.595.
AUSSIE BONDS: Holding A Twist-Steepener On First Trading Of The Week
ACGBs (YM +4.0 & XM -1.5) are mixed after pulling back from Sydney session highs on the first trading day following the Easter weekend. The local calendar was light today.
- Cash US tsys are ~1bp cheaper in today's Asia-Pac session after yesterday's long-end sell-off. Fed Vice Chair Philip Jefferson as well as regional Fed chiefs Tom Barkin (Richmond), Neel Kashkari (Minneapolis) and Patrick Harker (Philadelphia) are scheduled to speak later Tuesday. The IMF is also due to release its World Economic Outlook.
- Cash ACGBs are 1-6bps richer with the AU-US 10-year yield differential at -14 bps.
- Swap rates are flat to 4bps lower, with the 3s10s curve steeper.
- The bills strip has bull-flattened, with pricing +1 to +6.
- RBA-dated OIS pricing is 1-7bps softer across meetings today. A 50bp rate cut in May is given a 23% probability, with a cumulative 122bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow, the local calendar will see S&P Global PMIs alongside the AOFM planned sale of A$1000mn of the 3.25% 21 April 2029 bond.
EURUSD TECHS: Fresh Cycle High
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1573 High Apr 21
- PRICE: 1.1529 @ 06:04 BST Apr 22
- SUP 1: 1.1383 Low Apr 21
- SUP 2: 1.1140 20-day EMA
- SUP 3: 1.0898 50-day EMA and a short-term pivot level
- SUP 4: 1.0805 Low Apr 3
The trend in EURUSD remains bullish and Monday’s cycle high reinforces current conditions and highlights a bullish start to this week’s session. The break higher maintains the price sequence of higher highs and higher lows and note that moving average studies are in a bull-mode position, signalling a continued dominant uptrend. The focus is on 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1140.
