AUSSIE 10-YEAR TECHS: (Z5) Marked Lower

• RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
• RES 2: 95.960 - High Apr 7 (cont.)
• RES 1: 95.900 - High Oct 17
• PRICE: 95.670 @ 16:09 GMT Nov 7
• SUP 1: 95.510 - Low Sep 3  
• SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14 
• SUP 3: 95.275 - Low Nov 14  (cont) and a key support

Aussie 10-yr futures slipped lower last week on the back of hotter-than-expected inflation data. This returned prices lower despite nascent signs of a technical recovery as recently as late October. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg. 

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There performance of the onshore versus the offshore (Hang Seng) continues to diverge.  Over the last month, the gains onshore have moderated and are barely positive whilst the Hang Seng has declined.  This could potentially represent the two differing views on the China economy at present.  The first being that the economic expansion is weak and likely to decline, the other being that the economy is in the early stages of a broader growth cycle.   

Oil was moderately higher on Friday but the overall trend was down over the week as concerns of the size of the expected market surplus dominated uncertainty related to Russian oil sanctions. These offsetting factors mean that crude tends to trade in a limited range. The IEA’s updated forecasts will be published in its monthly report released 13 November. It had been forecasting a record surplus for 2026.

• WTI rose 0.7% to $59.84/bbl after a low of $59.32. It reached $60.46 early in European trading and then trended lower as risk sentiment deteriorated. The benchmark was down almost 2% last week. Initial support is at $58.83 while resistance is $62.59.
• Brent was 0.5% to $63.70/bbl to be down 1.7% on the week. It made a high of $64.39/bbl before moving down to $63.23 trading between initial support at $62.84 and resistance at $65.98. The bear trigger is at $59.97.
• There are signs that the latest sanctions on Russia are have an impact with the diesel contract spread widening and some refiners in India/China looking for alternative sources. Increased demand for non-Russian crude could support or even increase benchmark prices despite expectations of excess supply.
• US President Trump has given Hungary a one year exemption from the US sanctions on Russia’s Rosneft and Lukoil, as “it’s very difficult for him [Hungarian PM Orban] to get the oil and gas from other areas”. According to Bloomberg, Hungary imports 90% of its oil from Russia.