SOFR: Net Long Setting Dominated In Futures On Tuesday

• The New Zealand dollar has been the strongest in G10 Monday, helping NZDUSD extend its most recent recovery from the August lows to over 2%. We pointed out that 0.5800 remained a key technical hurdle on the downside, and latest dynamics following the weaker US employment data have helped foster this recovery.
• The rally places a clear focus on 50-day EMA resistance (intersecting today at 0.5921), a breach of which would counter the most recent bearish theme. Furthermore, spot is also closing in on 0.5944, short-term trendline resistance drawn from the July 01 high. Further gains would target the August 13 high at 0.5996.
• Today’s Kiwi outperformance has helped AUDNZD further moderate its recent advance to fresh cycle highs of 1.1157.  Strong medium-term resistance for the cross is seen at 1.1180, which may be assisting the latest downtick towards 1.11, which could extend towards the 1.1030/00 region where more solid demand would be expected.
• In New Zealand, manufacturing activity is due Tuesday in a fairly light week for domestic data. The calendar focus is on second quarter GDP and August trade figures, scheduled across September 18/19.

Spot gold trades at another fresh all-time high this morning, currently up 0.8% at $3,616/oz. Spot may be being supported by haven flows this morning, following significant Russian drone/missile attacks on Kyiv over the weekend. Meanwhile, tailwinds from increased Fed easing expectations after Friday’s labour market report may also be at play.

• The next topside objective for gold is $3,623, the 2.236 projection of the Dec 30 ’24 - Apr 3 - 7 price swing. Clearance of this level would expose $3,675, another Fibonacci projection point. It’s worth noting that spot remains in a heavily oversold condition on a 14-day RSI basis.
• On Friday, the World Gold Council released its monthly update on ETF (as of August) and central bank (as of July) flows.
• August ETF flows totalled 53 tonnes (worth $5.5bln), the majority of which (34.9 tonnes) came in the last week of the month as the US Govt vs Lisa Cook saga exacerbated existing concerns around Fed independence.
  • August ETF flows were centred in North America (37.1 tonnes) and Europe (20.8 tonnes).
• Central banks purchased 14.9 tonnes of gold in July, after 41 tonnes in June and 34.7 tonnes in May. Central banks have been net purchasers of gold for 26 months now, continuing to help underpin spot prices.
  • More timely data from the PBOC overnight indicated a tenth consecutive month of net buying, with the Chinese central bank reporting another 1.9 tonnes of purchases in August.

“US demands EU stops buying Russian gas if it wants new sanctions on Putin” - FT

• "European countries should stop buying Russian oil and gas if they want Washington to tighten sanctions on Moscow, according to Donald Trump’s energy chief, who said the trade was funding Vladimir Putin’s “war machine”."
• "Chris Wright, US energy secretary, told the Financial Times that European countries should instead buy American liquefied natural gas, gasoline and other fossil fuel products to meet the terms of the US-EU trade deal, which calls on EU countries to buy $750bn of US energy by the end of 2028."
• Link here