OIL: Oil Up Again, On Track For Weekly Gain
- WTI is up +0.62% in the Asian trading day at US$75.88 bbl and up +3.6% for the week.
- The rally this month has seen oil shift from being below all major moving averages, with a bearish momentum, to above all major moving averages. The strength of the rally has dragged all moving averages slope upwards, a sign that the bullish momentum could continue.
- Brent is going in the opposite direction, down -1.9% in the Asia trading day yet remains up by over 4% for the week.
- The CEO of Shell warned of a "huge impact" on global trade if the conflict results in the blockage of the key shipping route, the Strait of Hormuz. It is estimated that as much as a quarter of the world's oil trade passes through the Strait that is the passage between the Persian Gulf and the Indian ocean with Iran having history of focusing on ships in those waters. Citibank analysts suggest an obstruction to the passage could see oil at $90 bbl rapidly.
- Already tracking data is showing fewer ships in the straits.
- News abounds in terms of apparent 'approval' for the US to strike Iran but with the time frame remaining uncertain. Oil looks like it could trade sideways waiting for further headlines on the US's next move.
- China's oil refiners are not currently concerned about potential interruptions to Middle Eastern supplies due to the nation's record stockpile of 1.18 billion barrels according to BBG. The high stock buffer, soft refining margins, and seasonal weakness in demand are giving refiners room to maneuver, and they are not in a rush to find alternative sources to Iranian crude.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
NZD: Asia Wrap - A Weak USD Helps The Kiwi Get Wings
The NZD/USD had a range of 0.5919 - 0.5950 in the Asia-Pac session, going into the London open trading around 0.5945. The USD has come under pressure straight from the opening this morning and has remained heavy across the board all through our session the NZD has benefited from this.
- MNI - RBNZ: " Business expectations for annual CPI inflation increased across all time horizons. Mean one-year-ahead annual inflation expectations increased from 2.25% to 2.44%. Mean two-year-ahead inflation expectations increased from 2.47% to 2.54%. Mean five-year-ahead and ten-year-ahead inflation expectations increased to 3.06% and 3.94%, respectively. "
- MNI China Press - "The Shanghai Port U.S. West Line for mid-June shipment has reached USD9,100 per 40-foot container, a sharp increase from the USD2,250 offered in early May, Yicai news outlet reported, citing industry insiders.”
- The NZD/USD has been bid all of our session as the USD extended its sell-off after the NZD found some decent demand sub 0.5900 overnight
- The NZD now seems to be comfortable in a 0.5800/0.6050 range and awaits a catalyst to provide the impetus to break-out.
- The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. The first target is the highs just above 0.6000, a break above here could signal a bigger move higher is about to unfold.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5875(NZD349.6m), Upcoming Strikes : 0.5705(NZD805.1m May 23), 0.6150(NZD356.1m May 23), 0.5980(NZD513.4m May26)
AUD/NZD range for the session has been 1.0833 - 1.0851, currently trading 1.0840. The Cross has found some supply just above 1.0900, support is seen back towards 1.0800. A sustained break above 1.0920 is needed to turn the focus higher, until then expect supply on bounces.
Fig 1: NZD/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
AUD: Asia wrap - Pushes Higher In Asia
The AUD/USD has had a range of 0.6417 - 0.6452 in the Asia- Pac session, it is currently trading around 0.6445. The USD has come under pressure straight from the opening this morning and has remained heavy across the board all through our session. If you want to express a short in the AUD the crosses look a better way to do it.
- Bloomberg - “Australia’s hefty A$1.2b sale of December 2035 debt went off with decent demand metrics. That underscores that the concerns swirling around Japanese and US government bonds at the longer end don’t really resonate for the South Pacific economy given its cleaner fiscal fundamentals.”
- MNI - Expectations of sustained strong pricing at auctions proved accurate, with the latest round of ACGB Dec-35 supply seeing the weighted average yield print 0.55bp through prevailing mids (per Yieldbroker).
- The AUD/USD has seen a decent bounce today, price action against the USD is pretty impressive considering what was thrown at it yesterday. First target looks to be the highs just above 0.6500, a sustained break above here would signal the potential for a larger move higher.
- Expect buyers to be around on dips while the support in the AUD holds, a close back below 0.6300/50 is needed to negate the newly formed uptrend.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6380(AUD300m), Upcoming Strikes : 0.6375(AUD483.6m May 23), 0.6550(AUD480.3m May 23)
AUD/JPY - Today's range 92.56 - 92.90, it is trading currently around 92.65. Decent demand seen towards the 92.50 area where it holds again in our session. A sustained close back below 91.50/92.00 is needed to turn the focus back towards the lows again.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg
STIR: RBA Dated OIS Pricing Much Softer After Yesterday’s RBA Policy Decision
RBA-dated OIS pricing is flat to slightly softer across meetings today as the market continues to digest yesterday’s dovish tilt from the RBA.
- RBA-dated OIS pricing is now 8-20bps softer than yesterday’s pre-RBA levels.
- A 25bp rate cut in July is given a 68% probability, with a cumulative 70bps of easing priced by year-end.
Figure 1: RBA-Dated OIS – Current Vs. Pre-RBA Level
Source: MNI - Market News / Bloomberg
