OIL: Ukraine Strikes Another Shadow Fleet Tanker
Dec-10 18:42
Ukraine’s Security Service has struck another vessel from Russia’s “shadow fleet,” hitting the Comoros-flagged tanker Dashan in the Black Sea Dec. 10, according to a source cited by the Kyiv Independent.
- The ship, which was travelling at high speed with its identification system switched off, suffered “critical damage” after explosions tore through its stern while it transited Ukraine’s exclusive economic zone.
- The strike follows the Nov. 28 attacks on the sanctioned Russian tankers Kairos and Virat off Turkey’s coast, which were disabled by Ukraine’s Sea Baby naval drones.
- Days later, the Russian tanker Midvolga-2 reported an apparent drone attack near Turkey, though Kyiv denied any involvement and suggested Moscow may have staged the incident.
- Ukraine has also targeted infrastructure supporting Russia’s oil exports. On Sep. 24, naval drones hit the Black Sea terminals at Tuapse and Novorossiysk.
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STIR: Fed Rates Await A New Driver As End Of Shutdown Looks More Likely
Nov-10 18:37
- Fed Funds implied rates hold the day’s increase, 1-2bp higher from Friday’s close, on the back of improved optimism around the government shutdown ending and talk of $2k tariff dividends.
- Cumulative cuts from 3.87% effective: 15.5bp Dec, 25bp Jan, 34.5bp Mar, 41.5bp Apr and 55.5bp Jun.
- SOFR futures meanwhile have marginally pared some of their overnight losses (sitting up to 3.5 ticks lower) despite equity futures extending gains through the session.
- The terminal implied yield is at 3.105% (H7, +3.5bp) as it holds off Wednesday’s 3.16% which marked the highest close since late July (following beats for ADP and ISM services before weaker alternate labor data and consumer sentiment over Thu-Fri).
- We recapped the wide array of labor indicators for October, which have held greater than usual sway on markets recently, in our shadow Employment Report published earlier today: https://media.marketnews.com/US_Shadow_Employment_Report_Nov_docx_cceb084370.pdf
- Improved odds of the shutdown ending see a greater likelihood that the BLS nonfarm payrolls report for back in September is released in the next week or so.
GBPUSD TECHS: Corrective Cycle
Nov-10 18:30
- RES 4: 1.3471 High Oct 17 and a key short-term resistance
- RES 3: 1.3340 50-day EMA
- RES 2: 1.3237 20-day EMA
- RES 1: 1.3191 High Nov 10
- PRICE: 1.3155 @ 16:12 GMT Nov 10
- SUP 1: 1.3010 Low Nov 4 and 5 and the bear trigger
- SUP 2: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull leg
- SUP 4: 1.2877 1.618 proj of the Sep 17 - 25 - Oct 1 price swing
A bear trend in GBPUSD remains intact and the latest recovery appears corrective. The move higher is allowing an oversold trend condition to unwind. Firm short-term resistance to watch is at the 20-day EMA, at 1.3237. A break of this hurdle would signal scope for an extension towards the 50-day EMA, at 1.3340. A resumption of the downtrend would pave the way for an extension towards 1.2971. The bear trigger is 1.3010, the Nov 4 and 5 low.
FOREX: Equity Sentiment Key to AUD Outperformance, JPY Under Pressure
Nov-10 18:10
- Renewed optimism surrounding the US government reopening have significantly boosted risk sentiment, prompting the US Dollar to consolidate last week's losses. Reactions across G10 do not surprise, with the boost to risk assets filtering through to the underperforming JPY, while supporting the likes of AUD, NZD and NOK.
- USDJPY rose sharply from the open and extended gains to a 154.25 high on Monday. The pair has once again met some resistance above the 154.00 handle, registering a seventh daily high between 154.14-154.48, bolstering the short-term significance of this resistance cluster. First important support to watch lies at 152.68, the 20-day EMA.
- AUD received further tailwinds from RBA Hauser comments being on the hawkish side. For AUDUSD (+0.70%), a break above key resistance at 0.6618 (Oct 29 high) would be required to reinstate a bullish theme.
- NOK meanwhile also benefits from an upside surprise to domestic October CPI. A December cut was already unlikely following last week's Norges Bank meeting and the prospects of that are likely to fall back even further. EURNOK has extended the pullback from 11.80, potentially forming a double top pattern multi-week.
- ZAR (+1%) outperforms in the emerging market space, very much a product of the precious metals rally (gold +2.5%, silver +4%), which adds further support to the positive risk backdrop, boosting higher beta currencies. Latin American currencies have followed suit, with all regional currencies rising Monday.
- Key to watch in the days ahead will be further developments on the shutdown, with a handful of legislative hurdles still to be met. UK labour market data takes focus Tuesday, while NZ inflation expectations and German ZEW also cross.
