JGB TECHS: (U5) Returns Toward Lows

Oil prices were little changed on Wednesday with the market waiting for news on whether the US will get involved in the Israel-Iran conflict. Apparently President Trump has agreed to a plan but is still hoping that Tehran will agree to abandon its nuclear programme. However, supreme leader Khamenei said they would “never surrender” in response to Trump’s demand for an unconditional surrender.

• Crude fell earlier on Trump’s ambiguous comments regarding a US strike on Iran. He said that he only want to stop Iran gaining nuclear weapons and that it is willing to negotiate and suggested a visit to the White House, which Iran later denied. Oil prices began to recover following a large US crude inventory drawdown but fell on the unchanged Fed.
• WTI was flat on the day at $74.87/bbl. It rose to $76.07 but then fell to $72.94 on Trump’s comments. It is now up 23.2% in June but Fed Chair Powell didn’t seem concerned saying that the impact of energy shocks on inflation doesn’t tend to last. The benchmark is currently around $74.92. The uptrend continues with initial resistance at $77.62 while support is $68.49.
• Brent fell 0.4% to $76.15 to be up 21.3% this month. It reached $77.44 before declining to $74.41. The bull cycle remains intact but Brent has not breached Friday’s high yet of $78.50. Technicals signal that the trend is in an extreme overbought position. Initial support is at $70.41.
• EIA reported US crude inventories fell 11.47mn barrels last week, the largest drop since last week of June 2024. There were small distillate and gasoline builds of 0.51mn and 0.21mn respectively while the refinery utilisation rate fell 1.1pp to 93.2%. Gasoline demand was higher.
• Currently shipping disruptions are the main concern with the risk that Iran shuts the Strait of Hormuz but jamming of navigational systems has already resulted in a collision of two tankers, new bookings are not being taken and rates from the Middle East to China are up 50% (Bloomberg). 

USD/CNH edged higher post Wednesday's Asia Pac close, from near 7.1850 we rose above 7.1950 in US trade on Wednesday. We were little changed in aggregate for yesterday's session, while in early Thursday trade we track close to 7.1930. Spot USD/CNY ended yesterday at 7.1895, while the CNY CFETS basket tracker rose 0.31% to 95.82 (per BBG).

• Broader USD trends firmed late in Wednesday US trade, with higher median Fed dots for 2026 and 2027 and a relatively optimistic view of economic activity and the labour market aiding sentiment through Chair Powell’s press conference. Earlier we had seen USD pressure as the Fed maintained a dot plot of two rate cuts in 2025 and as President Trump hinted at potential talks with Iran.
• For spot USD/CNH, we are testing resistance around the 20-day EMA. A test above 7.2000 could see the 100 and 200-day EMAs target, which rest in the 7.2350-7.2390 region.
• CNH/JPY sits near 20.15 in recent dealings, within recent ranges. EUR/CNH dipped under 8.2500 late in Wednesday trade, but is around 8.2630 in early Thursday dealings.
• Headlines crossed late yesterday from US Tsy Secretary Bessent, which indicated he will likely meet with China officials in around three weeks (see this BBG link).
• Today on the data front we have Swift global payments in CNY for May. This comes amid renewed efforts to boost yuan usage globally, as outlined by China officials yesterday.  

• Singapore to Sell S$7.5 Billion 182-Day Bills