PERU: Moody's Says BCRP Still Has A Lot Of Space To Cut Policy Rate

• Both Brent and WTI futures sit moderately lower on Monday, although both are comfortably off session lows. Continued focus for global markets remains on US trade talks ahead of the August 1 tariff deadlines, amid EU preparations of countermeasures. Signs of a potential Russia-Ukraine meeting may have provided a headwind for oil prices, though tight diesel markets lent some support later in the session.
• Russia and Ukraine may hold talks on Wednesday or Thursday, according to various media reports. Trump has given Putin a 50-day deadline to reach a peace agreement.
• A bearish tone in WTI futures remains intact and the recovery since Jun 24 is considered corrective. The sharp reversal from the Jun 23 high continues to highlight scope for an extension lower. Support to watch is the 50-day EMA, at $65.68.
• Elsewhere broad dollar weakness has been led by a bull flattening move for US treasuries, providing solid support for precious metals.
• According to TD Securities, macro funds have begun buying back their previously built short positions in gold, and there remains strong belief that gold can rise further as trade negotiations continuing, policy rate cuts, a stagflationary environment and challenges to central bank credibility provide a supportive backdrop.
• Today’s solid 1.3% advance for spot gold has exposed $3395.1, the Jun 23 high, and the next upside target is located at $3451.3, the Jun 16 high. Note that medium-term trend conditions are bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend.

• RES 4: 0.8800 Round number resistance 
• RES 3: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
• RES 2: 0.8738 High Apr 11 high and a key resistance
• RES 1: 0.8698 High Jul 16
• PRICE: 0.8672 @ 17:03 BST Jul 21
• SUP 1: 0.8630 Low Jul 14
• SUP 2: 0.8615 20- day EMA
• SUP 3: 0.8551 50-day EMA
• SUP 4: 0.8508 Low Jun 27

The trend outlook in EURGBP is bullish and the cross continues to trade closer to its recent highs. Fresh cycle highs last week maintain the price sequence of higher highs and higher lows and note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on key resistance at 0.8738, the Apr 11 high. Support to watch is unchanged at 0.8615, the 20-day EMA.

Overnight reverse repo takeup rose to a 5-session high $213.6B Monday, up $14.4B from Friday.

• The pickup keeps the ON RRP facility size within recent ranges, however, and is likely to see some pullback later in this week on net Treasury bill settlements of over $60B.
• As we noted last week in our overview of recent Fed balance sheet trends, both overall bank reserves and overnight reverse repo takeup will decline over the coming 2 months as Treasury issues large quantities of  bills in order to build a cash pile north of $800B by end-September.