COMMODITIES: Gold Off Weekly Lows, But Bounces Appear Shallow
WTI futures traded poorly into the Wednesday close, extending losses on the clearance of the 50-day EMA and bear trigger. Markets have built on this S/T momentum lower, with support breaking at $62.77. The clear break here exposes $58.17, the May 30 low. Gains early last week marked an extension of a corrective cycle - which may now have concluded to result in cleaner positioning. $69.41 marks the 50.0% retracement of the Jun 23-24 downleg - an important level on any recovery from here. Gold prices are off the weekly low, however bounces appear shallow at these levels, keeping price within the mid-point of the recent range. The phase of weakness into the end of July supported the view that short-term pullbacks are corrective - for now - and the bull cycle that started Jun 30 remains intact. However, the yellow metal has traded through support at $3333.9, the 50-day EMA. A clear break of this level continues to signal scope for a deeper retracement and exposes the next key support at $3248.7, the Jun 30 low. Key near-term resistance is $3439.0, the Jul 23 high.
- WTI Crude up $0.29 or +0.46% at $62.94
- Natural Gas down $0.03 or -1.13% at $2.796
- Gold spot down $7.71 or -0.23% at $3346.86
- Copper down $1.1 or -0.24% at $454.8
- Silver down $0.26 or -0.68% at $38.23
- Platinum up $0.45 or +0.03% at $1343.95
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SONIA OPTIONS: SFIM6 97.40/97.50 Call Spread Lifted
SFIM6 97.40/97.50 call spread paper paid 1.25 on 10K.
BONDS: Most Of Rally Holds, Curves Flatter
Still no clear driver for the extension of rally in bonds, that was seemingly led by EGBs.
- Major core global FI curves flatten.
- The previously covered FV/US block flattener will have aided the direction of travel, but the fact that the move was EGB-driven negates that as a primary driver.
- Bearish technical themes intact across the major futures contracts.
EU-RUSSIA: Foreign Ministers Look To Sign-Off On 18th Sanctions Package
Foreign ministers from across the EU are meeting in Brussels as they aim to sign off on the 18th package of sanctions against Russia, which is set to include a lower dynamic oil price cap. The process has been held up for some time due to objections from Slovakia. Bratislava's objections have not specifically been about this sanctions package, but regarding the EU's efforts to impose a phase-out of all Russian hydrocarbons.
- The Slovakian gov't argues the phase-out poses threats to its energy security, but it can be approved against Slovakia's wishes, given that it only requires a qualified majority. The sanctions package on the other hand requires unanimity, with the gov't of PM Robert Fico effectively holding the sanctions 'hostage' until a compromise is reached on the phase out.
- Over the weekend, Fico claimed that his gov't would look to have a deal done by today's foreign ministers' meeting, saying “We want to resolve this by Tuesday because tensions are rising on all sides," while hinting at compromise when adding "We need to win something in this fight, though it will not be a 100-0 result...We want political commitments, guarantees from partners and the Commission that this problem will not remain only on Slovakia's back."
- Politico reports that a holdup by Malta at last week's Coreper II meeting has been dealt with and should not prove an obstacle to the package being agreed to today.
- EU High Commissioner for Foreign Affairs and Security Policy Kaja Kallas will deliver a post-meeting presser at ~16:45CET (10:45ET, 15:45BST).
