BOBL TECHS: (U5) Trend Needle Points South

• RES 4: 131.95 High Jun 13 and the bull trigger
• RES 3: 131.33 High Jun 20  
• RES 2: 130.76 High Jul 4
• RES 1: 129.92/130.21 20- and 50-day EMA values
• PRICE: 129.79 @ 05:41 BST Jul 21
• SUP 1: 129.08 Low Jul 14 
• SUP 2: 128.97 Low May 14 and a reversal trigger
• SUP 3: 128.90 Low Apr 10 
• SUP 4: 128.40 Low Apr 9

Bund futures continue to trade above the Jul 14 low. A bear cycle remains intact. Recent weakness resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.21, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.

The BBDXY has had a range of 1204.96 - 1206.54 in the Asia-Pac session, it is currently trading around 1206, -0.03%. There were no signs of Powell being fired over the weekend and the USD sighs a breath of relief. It is starting to feel that without the headwinds from the rumours surrounding a Powell sacking, the USD could well have started some sort of a reversion back to the mean. “EU envoys will meet as early as this week to draft a retaliatory plan in response to a possible no-deal scenario with Donald Trump. The move follows a hardened stance from the US trade team ahead of the Aug. 1 deadline.”- BBG.

• EUR/USD -  Asian range 1.1615 - 1.1636, Asia is currently trading 1.1630. The pair is testing its first support around the 1.1600 area. The price still looks a little stretched in the short term and is vulnerable to any correction in the USD, first support around 1.1550/1600 then more importantly the 1.1450 area.
• GBP/USD - Asian range 1.3402 - 1.3431, Asia is currently dealing around 1.3420. The support around 1.3350/1.3400 has proved to be solid first up. Bounces back towards 1.3500/1.3550 should now see offers initially. A sustained move below 1.3350 would signal a deeper correction could be underway.
• USD/CNH - Asian range 7.1775 - 7.1836, the USD/CNY fix printed 7.1522, Asia is currently dealing around 7.1820. Sellers should be around on bounces while price holds below the 7.2000 area and the PBOC manages the fix lower. Above 7.2000 and we could see a test of the USD Shorts.
• Cross asset : SPX +0.13%, Gold $3357, TYU5 110-27, BBDXY 1205, Crude oil $67.51

Fig 1: GBP/USD Spot 120min Chart

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

Oil prices continue to range trade and are slightly higher in today’s APAC trading after declining moderately on Friday. There has been little new information today to drive direction. Brent is up 0.1% to $69.36/bbl and WTI is +0.3% to $67.52/bbl.

• The oil market continues to monitor geopolitical developments closely with trade talks with the US continuing ahead of the August 1 deadline. Energy prices have been very sensitive to tariff developments as it remains worried that increased US protectionism will reduce global fuel demand. The EU is preparing counter measures if negotiations are unsuccessful.
• Russia’s role as a major fossil fuel exporter remains important too with the EU & UK announcing more restrictions including a reduction in the price cap for Russian crude; however the US is yet to follow. There will also be further targeting of its shadow fleet as well as another 20 banks losing access to the global payments system SWIFT.
• Limitations on third country refined products from Russian crude are also to be introduced, which will especially impact India. China has also protested the decision.
• Later the US June leading index and Bank of Canada Q2 outlook survey are released.