REFINING: Reliance Industries Oil-Procurement Under Scrutiny

• Despite a more benign-than-expected market reaction to the US strikes on Iran - particularly in the oil market - the USD is firmer against all others in G10 headed through to the crossover, staying favoured against all others amid higher geopolitical tensions. There remain several questions over the efficacy of strikes on Iran's nuclear sites over the weekend, but there are few signs of material retaliation from Tehran, despite full-throated threats and even warnings of the closure of the Strait of Hormuz in the hours after the attacks.
• For now, Trump's goals remain a return of Tehran to the negotiating table, or regime change away from the hardline approach of the current government.
• This price actions plays into the signals of a short-term base of the USD here - and a possible buy-on-dips pattern forming. We noted last week the importance of the USD Index showing above the downtrendline that's defined dollar weakness across Trump's term so far - and noted that even de-escalation headlines were proving insufficient to trigger any material weakness in the USD. This leaves 100.481 - 100.569 area as the next upside target and plausible resistance for a short-term bounce.
• With oil prices fully reversing their initial surge to start the week, and equity benchmarks remaining resilient to geopolitical developments, Japanese Yen weakness is continuing to standout. The break of a confluence of technical parameters has been assisting the move higher, namely the breach of the downtrend (drawn from the January highs) and the clean break of the May 29 high, cancelling the recent bearish theme.
• Preliminary June PMI data from the US is expected to confirm a slowing manufacturing sector but resilience from services, with existing home sales set to follow. Central bank speak Monday is headlined by ECB's Lagarde, who addresses EU parliament at 1400BST/0900ET, while Fed's Bowman speaks on monetary policy shortly afterward. ECB's Nagel, Fed's Goolsbee, Williams and Kugler also make appearances. 

Intensification of the Israeli missile attacks on Tehran and an apparent Israeli targeting of the already diminished Fordow nuclear facility seem to drive fresh risk-negative price action here, with the USD trading to fresh session highs (in BBDXY terms) & bonds rallying.

• Crude oil has been fairly unreactive to the news after ticking away from session lows ahead of the headlines
• The IAEA’s questioning surrounding the location of Iranian uranium will also be factoring into market moves here.