Reuters report citing four unnamed sources that the world’s largest oil exporter has cut August heavy crude supply for some Asian refiners
- at least four buyers in Asia
- cuts were mainly for Arab Heavy crude
No further details in the Reuters report.
Archives of “July 2020” month
rssNikkei 225 closes higher by 2.22% at 22,784.74
Asian equities buoyed to kick start the new week
It has been a solid session for Asian equities, with the Nikkei closing at a one-month high while we are also seeing the Hang Seng post 1.1% gains and the Shanghai Composite also seen higher by 1.9% currently.
The positive spillovers from US trading at the end of last week is helping, but also the fact that US futures are keeping more optimistic so far today.
Some market participants are pointing to this Pfizer, BioNTech vaccine story as a factor, following the more positive results that were reported two weeks ago here.
In any case, risk is on and the market is looking to keep the more positive mood going into European trading today. As such, the dollar is weaker across the board alongside the yen, with AUD/USD hovering around 0.6980 currently.
AUD/USD to drop back to 0.64 by year end – global economy weakening, China retaliation
A brief summary from a late week Rabobank note on the Australian dollar:
- investors are currently over-estimating the ability of the global economy to bounce back from the pandemic
Combined with:
- any news that China could be targeting Australian exports in retaliation for the government’s political stance would also leave AUD vulnerable
Rabo’s view is thus:
- we see risk of a drop in sentiment by the end of the year
- likely to drag AUD/USD lower
- forecast AUD/USD at 0.64 on a six-month view
Here’s a EUR/USD forecast (to 1.15) with the ECB expected to be optimistic this week
The European Central Bank meet this week, preview below.
- Meeting Thursday 16 July 2020
- Policy announcement at 1145GMT (policy likely unchanged)
Euro forecast via Danske (this from late last week):
- We remain constructive and expect the broad USD to decline over the coming months
- 3 month forecast is 1.15
On the upcoming ECB policy meeting
- we expect a repetition of recent comments from various governing council members, thereby striking a cautiously optimistic tone compared to the June projections.
- We also expect they may decide not to use the EUR1,350bn PEPP envelope in full.
- No new initiatives are expected next week
- Markets may not be prepared for a ‘less dovish’ message
- with abundant liquidity, PEPP and APP still ongoing
- Our key expectation is that the ECB will reiterate its stance towards supporting a recovery, with, not least, a focus on sovereign spreads.
For spot FX,
- the direction and stance of the ECB and euro area fiscal politics are, in our view, quite well priced and communicated (though to a lesser extent when it comes to the outcome for Brexit). In turn, it will be the breath and speed of the global recovery that sets the tone in EUR/USD, and mostly through the USD leg
Which investor bears a 93% drop?
It’s amazing that gold is only trading at $1800 given the below
An Update :US Dollar ,Sterling ,Euro ,Yen ,CAD ,AUD ,Chinese Yuan ,GOLD ,Crude -Anirudh Sethi
The bearish technical case for the dollar appears to be growing. It is a little disconcerting that it seems to have become the consensus view, and the gross and net long speculative euro positioning in the futures market is near two-year highs. However, the speculative positioning in the other currency futures is not nearly as extreme. Indeed, speculators are still net short sterling, Australian dollar, and Canadian dollar.
Turns in the market often appear to have a cascading effect. The turn does not happen all at once. Given that the euro is the single most important currency in the world after the dollar, that is the real interest. The Swiss Franc can sometimes be seen as its lead indicators. The Golden Cross (50 and 200-day moving averages) crossed down for last July. The euro’s averages crossed late last month, and at the start of last week, the 50-day moving average moved below the 200-day moving for the Dollar Index. The moving average for the Swedish krona crossed in the middle of June, while the Aussie’s averages crossed on the last session in June.
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Iran and China are working towards partnerships – would benefit by offsetting US pressures on each
A weekend report from the Wall Street Journal on mooted wide ranging partnership discussion by the two countries:
- China would benefit from Iranian oil
- Iran would get Chinese investment
Iran and China partnering up would deflect US pressures and influence on both.
WSJ goes on:
- An initial draft of the Iran-China deal still requires Iranian parliamentary approval
- under a 25-year partnership, China would import “sustainable” levels of Iranian oil, but offered no further details
Here is the link for more (may be gated).
OPEC and its partners will consider increasing oil output at a meeting this week
Saudi Arabia and most others in the OPEC+ alliance support increasing output by around 2 million barrels a day say reports ahead of this week’s meeting.
- Key members of the Organization of the Petroleum Exporting Countries and its Russia-led allies will hold a virtual meeting on Wednesday 15 July
There is no further detail on this, link here
The increased optimism comes as hopes are up that demand is beginning to recover and will continue to do so. Its not going to be smooth sailing though.
Thought For A Day
