NZD: NZD/USD - Finds Some Demand Toward 0.5800

Oil trended lower again on Tuesday but trading continues to be in a narrow range with around a dollar between the intraday high and low. With US tariffs due to be implemented on August 1, trade negotiations are being monitored closely. Oil markets are concerned about the impact of increased protectionism on energy demand at a time when the outlook is for ample supply. 

• WTI fell 0.8% to $65.45/bbl off the day’s low of $64.82. The benchmark is still up 2.5% this month. It has started the day slightly higher at $65.56. The significant decline from the June 23 high highlights scope for WTI to continue moving down.
• Brent was down 0.8% to $68.64/bbl after falling to $68.12 in US trading. It is now 2.9% higher in July, but technicals suggest that this is corrective with a bearish theme remaining. Initial resistance is at $72.66 with support at $65.92, 30 June low.
• Japan’s trade negotiator Akazawa worked with US Commerce Secretary Lutnick and now plans a meeting with President Trump. Talks between the EU and US are also being watched closely.
• Bloomberg reported that US oil inventories fell 577k barrels last week, according to people familiar with the API data. There was a gasoline drawdown of 1.2mn but a distillate build of 3.5mn. The official EIA data is out Wednesday.

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.960 - High Apr 7
• PRICE: 95.685 @ 16:52 BST Jul 21
• SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.707 - 1.0% 10-dma envelope

Aussie 10-yr futures traded under pressure for much of last week, keeping prices pressured and within range of the recent pullback lows. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. To the upside, a recovery of recent losses would shift attention to resistance at 96.207, a Fibonacci retracement point.

TYU5 reopens at 111-10, down 0-03 from closing levels in today’s Asia-Pac session.

• Overnight the US 10-year yield had a range of 4.3262% - 4.3957%, closing around 4.344%. 
• Treasury yields ended broadly lower overnight; small adjustments in the yields curve(2s10s -0.44 at 50.851, 5s30s +0.59 at 103.047).
• MNI US: Trump Downplays Removing Powell, To Decide On Xi Meeting "Pretty Soon". Asked if he believes Powell should resign: “I think he’s doing a bad job, but he’s going to be out pretty soon anyway. In eight months, he’ll be out. I call him ‘too late’, he’s too late all the time. He should have lowered interest rates many times.”
• MNI US DATA: Redbook Retail Sales Maintain Steady Growth In Early Q3. The Johnson Redbook Retail Sales Index continues to post solid gains, rising 5.1% Y/Y in the week ending Jul 19, fairly steady compared with 5.2% the prior week.
• (Bloomberg) --Bullish Bond-Option Bets Build as Angst Around Powell Subsides. Speculation that President Donald Trump will eventually tap a dovish successor to Federal Reserve Chair Jerome Powell is feeding into a bullish tilt in Treasury options.
• The 10-year yield has moved back towards its pivot within the wider range 4.10% - 4.65%, expect supply around 4.30/35% first up. A close back below 4.30% would begin to get the bulls excited once more and the chopfest within the range will continue.

Fig 1: 10-Year US Yield 120min Chart

Source: MNI - Market News/Bloomberg Finance L.P