OIL: Oil Set for Weekly Loss as US Iran Tensions Moderate
Feb-13 04:52
- Oil prices slipped marginally in the Asia trading day and are set to finish down for the week as immediate US Iran concerns moderate.
- Following meetings with Israel's President Netanyahu this week, US President Trump suggested that negotiations with Tehran could last as long as a month, but cautioned that failure to reach an agreement could be 'very traumatic' for Iran.
- The weak is ending on a softer note for investor sentiment, dragging equities and oil with it. WTI is down modestly today and -1.2% for the week at US$62.75 bbl having traded in a tight range of $62.39 - $65.83
- WTI is currently near its downside resistance via the merged 20-day / 200-day EMA at $62.70. A break below sees resistance via the 50-day EMA of $61.11
- Brent is down just -0.07% today at US$67.47 bbl, and down -0.85% for the week. Brent has traded in a relatively narrow range of $67.02 - $70.72 over the last 5 trading days.
- For both WTI and Brent at present, momentum indicators are broadly neutral.
- US Energy Secretary said that energy companies who lost billions when Venezuela nationalized the oil industry in the 70s. Secretary Wright said on BBG TV that “They are in active discussions with ConocoPhillips — the people that lost assets in the before, are all in active dialog right now to recoup losses.”
- In the short term oil markets will likely return focus back to the issue of oversupply until further news breaks on US Iran discussions.
- Most forecasters see oil finishing lower by year end once geopolitical tension with Iran subside.
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GOLD: Gold Resumes Rally, New Highs in Place
Jan-14 04:51
- Gold's overnight decline was short lived as the rally resumed Wednesday in the Asia trading day.
- Bullion is up over +0.95% to US$4,629.51 to set yet another new high and into overbought territory on the 14day relative strength index.
- With geopolitical risks heightened, and potential criminal indictment against the FED Chairman, gold has exhibited 'safe haven status' behaviour even as equities rally.
Today's rally sees gold up over 6.6% year to date and has seen a wave of forecasts for it to top US$5,000 this year.
FOREX: USD-BBDXY Drifts Within 1205-1215 Range, Supreme Court Ruling To Come
Jan-14 04:30
The BBDXY has had a range today of 1211.17 - 1212.63 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD largely ignored the softer CPI and drifted back up albeit within its range. On the day, it looks like more of the same while we trade within the 1205-1215 range, watch for any ruling from the Supreme court as well as a potential incursion into Iran to maybe provide a catalyst. This lack of a trend is being reflected in the CFTC data which shows very little positioning in the USD Index to start the year. A break above 1215-1216 could signal the potential for a deeper pullback.
- EUR/USD - Asian range 1.1636-1.1648, Asia is currently trading {EURUSD Curncy}. We are firmly back in the wider 1.1450-1.1850 range which dominated the last 6 months of the year and we need a catalyst to get a break and some sort of a trend going again. On the day, support is seen back toward the 1.1600-1.1620 area, a sustained break below 1.1600 could signal a deeper pullback may be on the cards.
- GBP/USD - Asian range 1.3420-1.3445, Asia is currently dealing around {GBPUSD Curncy}. The pair again topped out just below 1.3500 as the USD pushed back. On the day, watch to see if sellers can continue to keep the price below 1.3500, the bears need a break back below 1.3350/80 to signal a correction lower might be on the cards.
- Cross asset : SPX -0.10%, Gold $4625, US 10-Year 4.173%, BBDXY 1211, Crude Oil $60.94
- Data/Events : Italy General Government Debt
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUSSIE BONDS: Modestly Cheaper, Recent Narrowing In AU-US 10Y Diff Reverses
Jan-14 04:26
ACGBs (YM -1.0 & XM -2.0) are modestly weaker.
- Job vacancies were down -0.2%q/q (ending in Nov). Job vacancies remain around 30% off 2022 highs, but the trend though was only down modestly, to end Nov just under 327k.
- Cash US tsys are slightly richer, with a steepening bias, in today’s Asia-Pac session.
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at at +55bps. A simple regression of the 10-year yield differential against the AU-US 1-year forward 3-month (1Y3M) swap spread over the past two years suggests the current spread sits 3bps above its regression-implied fair value.
- Today’s Oct-36 auction result extended the recent trend of firm pricing for ACGBs, with the weighted average yield printing 0.22bps through prevailing mids, according to Yieldbroker. However, demand was weaker, as reflected by a cover ratio of 3.1950x, down from the prior 3.7100x. The AOFM plans to sell A$700mn 3.25% 2029 bond on Friday.
- The bills strip is little changed.
- RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 30% for February to 90% by June and 144% by December 2026.
- Tomorrow, the local calendar will see Consumer Inflation Expectation data.
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