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WTI crude oil falls $1.21 to $71.77 after early gains amid Middle Eastern tensions
WTI crude oil fell by $1.21, ending the day at $71.77 after a bumpy trading session. Prices initially jumped, only to drop over $3 during early trading in New York before partially recovering.
This volatility came amid new Israeli strikes and threats from Iran. Oil prices are highly uncertain, mainly influenced by events in the Middle East, although there have been no supply disruptions yet.
This latest drop in WTI crude oil shows a market trying to adjust itself amid serious geopolitical challenges. The initial rise followed by a decline indicates that traders are reacting quickly to news instead of focusing on fundamental factors. This creates both opportunities and risks. Movements like these, driven by tensions in the Middle East, suggest that trading is more about sentiment than significant changes in supply chains—at least for the moment.
Israeli military actions and Iranian statements have sparked brief rallies and sharp corrections. While these fluctuations are common, their frequency and intensity are increasing. Futures contracts are becoming more sensitive to sudden events, meaning traders may need to switch positions quickly and hedge more tightly, especially during overlapping trading hours in Europe and North America.
Since there are no actual disruptions in oil flow, the market is still dealing with probabilities instead of certainties. It’s important to focus on this. The absence of a supply cut has limited further price increases, but the risk premium being built up and then unwound continues to create significant intraday swings.
Keep a close eye on the Brent and WTI spreads, which are showing hesitance—another sign of caution beneath any rising prices. Data on Baker Hughes rig counts or upcoming refinery maintenance could provide some insight, especially if they differ from expected seasonal trends.
It’s notable how quickly early momentum faded during New York trading. Such a reversal driven by news rather than inventory data or OPEC comments suggests that speculative positions were too aggressive or that many protective stops were triggered at once. When we see $3 drops vanish in just hours, it usually reflects short-covering along with opportunistic buying, rather than strong market conviction.
US yields have also started to shift noticeably, and their impact on the dollar could affect crude prices more quickly than in the past. As the dollar serves as a counterbalance to commodities, traders face increased pressure to consider broader economic factors when adjusting their strategies.
We may continue to see sharp price movements in the short term, especially if tensions rise without leading to actual blockades or pipeline issues. For now, the market dynamics remain stable, but traders should review their risk-adjusted positions. Price targets shouldn’t depend on quick reactions or isolated events in conflict areas.
When Briese cautioned last week about decreased commercial hedging activity, it was more than just a theory. The options markets are becoming more fragile. We’ve observed wider bid-ask spreads in near-term contracts, indicating that liquidity providers are adjusting to protect themselves. This means a more careful approach is needed when using leverage.
Always monitor open interest in contracts with unusually high volume. These can significantly influence short-term narratives but often unwind just as quickly. The goal is to tell the difference between noise and movements based on real changes in market structure. With spot prices hovering below recent averages and approaching high-volume price zones, this creates a battleground—not a definitive trend.
Energy traders should stay alert. The frequency of unforeseen events is rising, and while supply hasn’t taken a hit, the market is acting as if it’s pricing in risks that might never materialize. This opens up potential for positioning errors, particularly in the short term. The recent behavior during early New York sessions highlights how quickly sentiment can shift—so it’s wise to avoid overcommitting based on initial moves. Remain agile. Keep capital reserved. Avoid chasing trends that lack clear context.
Russia’s Central Bank reserves increase to $687.3 billion from $678.7 billion
Russia’s central bank reserves increased to $687.3 billion, up from $678.7 billion. This change shows ongoing shifts in Russia’s economic strategy.
The rise in reserves signals a careful approach to financial policy, contributing to the evaluation of Russia’s economic stability by analysts and market participants.
Economic Indicators
This data offers a clear look at the country’s financial health and helps us understand larger economic trends in the region. Reserve figures are among many economic indicators that shape financial markets. They help assess national stability and future fiscal plans. The recent increase in Russia’s central bank reserves—from $678.7 billion to $687.3 billion—is more than just a statistic; it results from the government’s policy adjustments. This increase usually shows consistent capital inflow and more careful spending in government accounts. For those focused on derivatives, especially where geopolitical factors intersect with technical signals, this change carries weight. It may influence investment flows and affect price volatility related to Russian assets. Trading volumes in contracts sensitive to Russia may react, especially if reserve changes lead to new policy decisions.Market Implications
Stable foreign reserves typically serve as a cushion against economic risks. This stability complicates predictions about market volatility, especially in currency-linked options or credit default swap spreads. Predictable reserve growth can impact pricing, but this relies on real liquidity data and broader economic outlooks. While the recent rise isn’t dramatic, it influences market expectations about pressure on the central bank to adjust rates or intervene in currency markets. This clarity aids in short-term hedging strategies and positioning for long-term investments. Traders looking at macro-driven instruments should determine whether the reserve increase genuinely reflects an improved current account or results mainly from changes in gold or other non-U.S. dollar assets. The mix of assets is crucial, as diversification in foreign holdings can impact correlations between different investment contracts. From a relative value standpoint, this might narrow the gap for those betting against countries with weaker reserve profiles. Further increases in reserves could also influence pricing for synthetic exposures. We should consider these changes as part of a larger fiscal strategy. If future data show continued growth, it may encourage restrictive capital policies or boost confidence against upcoming sanctions or external pressures. As we move forward, trade signals may not appear immediately, but strategies relying on stable regional risk—especially in commodities and energy-related currencies—will need to adapt to the new level of reserve stability. Stay flexible, monitor paired exposures where local asset values are responsive to changes in the sovereign balance sheet, and keep an eye on option skews. Small shifts in perceived economic resilience often reveal themselves first through reserve changes. Create your live VT Markets account and start trading now.The U.S. auctioned 20-year bonds with a yield of 4.942% and strong demand, indicated by an average bid-to-cover ratio.
The U.S. Treasury recently held an auction for 13 million 20-year bonds, achieving a top yield of 4.942%. This yield matched the when-issued (WI) level at the auction time, which was also 4.942%.
The auction had no tail, with a 0.0 basis point difference compared to the six-month average of 0.1 basis points. The bid-to-cover ratio was 2.68, exceeding the six-month average of 2.59.
Demand from Domestic and International Sources
Domestic demand accounted for 19.9% of total bids, which is higher than the six-month average of 18.1%. International demand, represented by indirect bids, was at 66.7%, slightly below the six-month average of 67.2%. Dealers took the remaining 13.4%, which is less than the six-month average of 14.8%. Overall, the auction received a grade of C+, indicating slightly better performance in some areas. This auction of 20-year bonds from the U.S. Treasury was well-received. Demand met expectations, and the pricing matched the expected yield in the WI market. With no tail, buyers were clearly aligned with market estimates, showing strong interest in this yield range. The bid-to-cover ratio of 2.68 indicates a healthy demand compared to supply and is above the six-month average. Additionally, direct bids, which typically come from larger domestic investors, increased slightly, suggesting they see good long-term value.Market Insights and Future Considerations
Indirect bids, often reflecting international demand or foreign central bank activity, dipped slightly below their usual levels. While this isn’t alarming, it may hint at a small shift in preference for different bond durations. Dealers had a smaller share than usual, indicating stronger primary interest and less excess to absorb. Overall, there’s solid demand for longer-dated bonds even as yields approach 5%. This yield may attract investors looking to secure returns near multi-year highs. For those dealing with derivatives tied to longer maturities, these results have significance. Firm demand appears at these yield levels, creating a potential ceiling unless inflation surprises or policy changes occur. Historically, volatility around auction times has caused temporary market shifts. However, with no tail in this auction and dealers possessing a lighter share, we might not see forced trades into swaps or futures just yet. Measured adjustments are essential now. Don’t overreact to a single auction result, but find points along the curve where options may become more attractive. The data indicates that the market can handle higher yields but may struggle to accept much more without pushback. We’re also seeing an increase in direct bidders, which points to a change in how real money accounts perceive volatility. This could shift where convexity supply moves in future sessions, particularly in longer-dated instruments. Adjusting positions should consider both rate directions and the increased activity from domestic accounts looking to re-engage with a longer-term focus. Understanding the diverse motivations of buyers reshapes our approach to hedging and duration targeting through derivatives. This auction showed less turbulence than recent ones. More clarity has emerged. Watch how swap spreads behave around issuance dates, as we are beginning to see similar compression patterns. With flattening auction tails and decreased dealer participation, expect fewer forced adjustments, giving spreads more room to fluctuate. Stay alert; we’ll proceed with caution. Create your live VT Markets account and start trading now.The EUR/USD rallied towards last week’s high, encountering sellers but staying above the supportive level of 1.15736.
On Friday, the EURUSD tested the 1.14944 level from June 5 but couldn’t maintain momentum below this point, closing at 1.15468. During the Asian session today, buyers showed interest, pushing the price higher.
Today’s trading saw the EURUSD rise above the April 21 high of 1.15726, reaching a peak of 1.16139. However, the price has pulled back, approaching the April high again at 1.15736. The price dipped to 1.1577, staying above this level, which is crucial for buyers. If this support holds, the next target will be last week’s high of 1.16312 for potential further gains.
This situation reflects a test of strength near a previously established support level. When the price dropped toward the June 5 low at 1.14944, buyers pushed back before it could fall further. Closing at 1.15468 shows a solid defense of this area. As we entered Monday’s Asia session, fresh demand pushed the price past the April 21 high at 1.15726. This breakout was brief, followed by a pullback that brought the price back above the previous resistance.
Traders are now closely watching the area around 1.1573. It acted as a barrier in April and is now being retested from above as support — a typical technical reaction level. Recently, we have seen multiple failed attempts to close below these levels, indicating that the market isn’t ready to fully unwind the earlier rally. This area will continue to guide short-term flows.
With the price hovering just above former resistance, there is an opportunity for directional bets. The weekly high at 1.16312 is within reach, but this won’t happen unless 1.1573 holds strong under pressure. The move may not be smooth and could depend on macro releases or unexpected buying activity.
From a tactical perspective, lower timeframes show that positioning has been dynamic. Buyers still have options, but slipping below 1.1570 would undermine confidence and could prompt speculative long positions to adjust or exit. We have not seen strong follow-through in either direction yet, leaving many trading desks cautious but attentive, especially with option expiries and data coming later in the week.
If momentum builds above the week’s early high at 1.16139, there may be room to test the upper ranges from February and March, especially if rate expectations stay largely priced-in. However, the distance to last week’s low is notable. If buyers back down now, the pair may face a deeper correction, possibly attracting momentum sellers and revisiting 1.1494.
We prefer a measured approach to mapping out support and resistance, allowing price reactions to confirm our bias. There is demand, but it is cautious; commitment is not yet clear. Yesterday’s flows were light, but this could change quickly.
In June, the NY Empire State Manufacturing Index recorded a -16, falling short of expectations.
The NY Empire State Manufacturing Index for June reported a value of -16, which is worse than the anticipated -5.5. This indicates a decline in the manufacturing sector in New York, showing reduced activity compared to previous forecasts.
AUD/USD bounced back from a significant drop, reaching around 0.6550. This recovery is supported by a weakening US Dollar and a market that is willing to take on more risk.
Euro and US Dollar Performance
EUR/USD surpassed the 1.1600 level but faced challenges maintaining that upward movement. The weaker US Dollar allowed this currency pair to stabilize and recover from earlier losses. Gold prices dropped to roughly $3,380 per ounce, influenced by a strong inclination toward riskier investments and rising US Treasury yields. This decline in gold is linked to the overall market conditions. Ripple (XRP) is showing signs of a potential short-term uptrend, with hopes of reaching $3.00 as market risk appetite improves. This comes after recent geopolitical concerns affected the market. China’s economy appears robust, with mixed data for May, and is on track to meet growth targets by 2025. Strong retail sales have a positive impact, but there are concerns regarding weak fixed-asset investment and property prices. The NY Empire State Manufacturing Index’s reading of -16 for June indicates a significant contraction in business activity, worse than analysts expected. This low figure suggests a decline in new orders, shipments, and employment in New York’s manufacturing sector. Such a surprising drop not only raises concerns about regional output but also points to broader caution regarding industry risks in the near future. We can expect increased sensitivity around US economic reports in the upcoming weeks. The rebound in AUD/USD to the 0.6550 level came after earlier selling pressure, mainly driven by external factors rather than local strength. The weakened Dollar provided an opportunity for the Aussie to recover after days of losses. Rising equity markets also contributed to the AUD’s rebound. However, we should not overlook potential renewed pressure due to differences in monetary policy or declining demand signals from China, factors that have previously hindered this pair’s progress.Gold and Ripple Movements
EUR/USD’s rise above the 1.1600 mark looked promising but struggled to maintain momentum. Despite a weaker Dollar, buying interest didn’t hold. The pair’s failure to stay above this level indicates ongoing concerns about euro-driven growth. This hesitation could arise from cautious statements by ECB members or uneven growth data from key areas in the eurozone. Future gains may face resistance unless market sentiment improves significantly. Gold’s decline to around $3,380 per ounce reflects shifts toward riskier assets and the ongoing rise in US yields. As nominal rates go up, the opportunity cost of holding non-yielding gold becomes clearer. While this pullback doesn’t mean a full reversal, demand for safe-haven assets is likely to be tested. It will be interesting to see how much buying interest remains in light of any further weakness. Ripple is beginning to show signs of breaking out, fueled by a shift in market sentiment. With a renewed interest in digital assets, XRP traders are looking to test the $3.00 level. The easing of geopolitical tensions seems to have boosted interest in altcoins. However, significant resistance levels are ahead, and momentum will depend on trading volume and potential regulatory challenges. In Asia, China’s May data presented a mixed view but generally suggested resilience. Strong retail sales provided stability, while weaker property and investment data pointed to possible internal issues. While the overall tone indicates continued growth in China, imbalances in demand could put pressure on commodity-linked instruments and regional currencies. Monitoring trends in industrial production and credit flow will help guide necessary adjustments. Traders in rate-sensitive instruments should be watchful for signs that recent data changes may impact expectations going forward. Adjusting exposure in commodities and currency pairs based on growth-related updates and policy changes could present better opportunities in the coming days. Often, significant shifts occur not just from headline figures but from reactions in yield spreads and risk indicators soon after. Create your live VT Markets account and start trading now.Trump shares optimism about a deal with Canada while discussing Iran and G7 dynamics; market reactions remain minimal.
During the G7 meeting, Trump shared his positive outlook on making a deal with Canada. He mentioned they were considering different ideas, including some from Carney. Trump stood firm on tariffs, recognizing different views but believing an agreement could be possible.
On international relations, Trump noted that Iran expressed interest in talks but pointed out they should have reached out sooner. He indicated that Iran was not faring well in the ongoing conflict. When discussing Putin, Trump stated that Putin would not be welcomed back at the G7, hinting that his absence from the G8 was keenly felt.
Economic Commentary
Trump also suggested that including China in the G7 could be a good idea. The market barely reacted to these comments, showing some hope for trade talks. However, it seemed there was a disconnect, raising doubts about the chances of successful negotiations. The comments from the G7 summit signal important factors for future positioning. The possibility of a deal with Canada and the involvement of Carney indicates ongoing economic discussions. While no direct results have been finalized, the willingness to explore various proposals suggests some level of cooperation, at least on the surface. Trump’s reliance on tariffs as a bargaining tool shows his preference for using economic pressure. The markets have accounted for this strategy, but his repeated emphasis adds uncertainty about timing—there may be continued volatility around any sudden changes, especially if surprises arise in these discussions. Trump’s remarks on Iran imply that their delayed willingness to negotiate could increase geopolitical risks in the region. This might lead to higher prices on energy-related derivatives, especially those tied to oil and Gulf-exporting currencies. When discussions seem far off, the market often becomes more sensitive to potential crises, especially ahead of diplomatic deadlines or military updates.Market Strategy Recommendations
Regarding Putin and Russia’s exclusion from the G7, the situation remains stable, resulting in minimal market impact. However, this ongoing exclusion suggests we can expect consistent sanctions policies and long-term contracts in Eastern Europe. While this reduces uncertainty in some ways, we should remain vigilant for any changes in messaging or support from other G7 nations. As for China, mentioning their potential inclusion in G7 discussions is a soft approach that allows for potential changes in trade alliances. There are no immediate price impacts, but traders should recognize the implications—if discussions progress, it could significantly affect longer-term hedges in indices and manufacturing assets. Overall, the market’s reaction to these statements was subdued, indicating it was not caught off guard. The mild positive response to trade talks reflects relief more than enthusiasm. The apparent lack of agreement among negotiators likely lowers expectations. Strategically, premiums on both sides of the volatility curve look appealing for straddle positions, especially ahead of upcoming bilateral meetings. We recommend closely tracking geopolitical events and their related asset classes, noting any shifts from established viewpoints. Be cautious of simple statements that might seem minor but could lead to increased implied volatilities. Options pricing appears conservative in some cross-asset scenarios, especially concerning trade-sensitive currencies or commodity contracts. Quick moves could still occur if rhetoric changes, even without formal policy updates. Keeping an eye on tone is just as crucial as content. If overtures are ignored or minimized, markets might turn to defensive strategies. High-deliverability assets and dollar-related hedges remain popular when clarity is lacking. Be prepared to adjust based on shifts in open interest that may signal more profound changes than headlines suggest. Create your live VT Markets account and start trading now.Analysts expect the USD/CNH pair to fluctuate between 7.1770 and 7.1970.
The USD is expected to remain between 7.1770 and 7.1970 in the short term. Analysts Quek Ser Leang and Peter Chia believe that in the long run, the USD will trade within a wider range of 7.1620 to 7.2200.
In the last 24 hours, the USD was projected to range from 7.1700 to 7.1950 but ended up in a tighter range, indicating continued range trading. This aligns with the longer-term outlook.
Short Term Momentum
For the next 1-3 weeks, the momentum has eased, confirming that the USD is staying within the established range. Recent USD movements support this prediction. Keep in mind that market analysis involves risks and uncertainties. It’s important to do your own research before making any investment decisions. The information provided may not be completely accurate or timely. Investing in the open market carries risks, including the potential total loss of your investment, which you bear completely. The insights shared here represent the authors’ opinions and are not official positions. The US dollar is currently stuck in a trading range between 7.1770 and 7.1970, showing resistance to breaking out. Looking at the bigger picture, Quek and Chia suggest a broader range of 7.1620 to 7.2200, indicating a cautious consolidation pattern. This means there is no strong directional movement in the market. Momentum has weakened, resulting in price movements consistent with uncertainty among traders. Many are either rotating positions or hesitant to enter new trades. This creates opportunities for a fade-the-extremes strategy—selling near the upper limit and buying near the lower limit.Market Patience
From our perspective, it’s better to fade quick movements towards 7.22 or 7.16 rather than expect a breakout to hold, especially with low short-term volatility. Trades made too close to the middle of the range can lose value quickly. Instead of chasing prices, wait for clearer risk-reward setups. For those monitoring the market closely, we’ve observed that the 24-hour range has narrowed even further than anticipated. This narrowing reflects the lack of strong movement in either direction, confirming that strong directional setups are not yet validated. In such situations, the decay of option premiums must be considered. In quieter markets, implied volatility often drops. This makes it worthwhile to explore opportunities where time decay (theta) works in your favor. Range-bound currencies tend to punish those who act too quickly. Patience is key. Traders often seek signs that these established limits will break, typically through market catalysts or shifts in trends. However, recent order flow and positioning do not suggest that a breakout is imminent. In fact, being cautious has proven to be a smart strategy over the past week. We know that the broader mean remains stable. We’re not seeing huge breakouts; instead, the market is circling a central point, with repetitive turns and low energy. During this time, the risk isn’t missing a rally, but rather overcommitting in anticipation of one. Disciplining yourself to protect against market noise is more valuable than trying to predict a breakout that may not happen. When prices remain stable for a long time, it’s often best to wait for clearer signals before adjusting. That said, market ranges don’t last forever, and when they do break, it can happen quickly. Yet, there is currently no pressure indicating that the established thresholds are at risk. For now, measured responses make more sense than aggressive actions. Create your live VT Markets account and start trading now.Trump and Carney are in a closed-door meeting, set to appear together later, while USD/CAD falls by 27 pips to 1.3559.
Trump and Carney are currently in a private meeting, and they are expected to speak publicly afterward. There has been a typical delay in their schedule, which is common for Trump.
The exchange rate for USD/CAD has dropped by 27 pips, now at 1.3559.
This update shows that the delay in the Trump-Carney meeting is affecting the market even before any official statements. Traders are reacting, as seen in the USD/CAD currency pair, which fell 27 pips to 1.3559.
The market response isn’t just about the currency rate; this drop happened quickly after the news about the delay. It seems traders are concerned about uncertainty, with some predicting that the meeting results could change expectations soon. For now, it’s about the timing of the meeting rather than what is actually discussed.
As we move forward, it’s important to monitor changes in trading volume and how short- and medium-term markets respond. Current pricing indicates that traders are bracing for sharp movements related to the joint appearance.
Carney is known for his careful communication style. If he alters his tone even slightly, long-term pricing might adjust, likely leading to increased demand for convexity and rehedging flows, which can amplify market moves.
These situations often occur when managing expectations meets speculative trading. Right now, implied volatilities are rising—not because of actual volatility, but due to what traders anticipate. It’s crucial for traders to be aware of gamma exposure, especially when it turns negative, as this can exaggerate price movements.
Additionally, since the loonie is responding more strongly than expected, it might be wise to evaluate current hedging strategies. Short-term options may provide a low-cost way to capitalize on any significant shifts in market expectations after the appearance. Keep track of risk reversals, especially for weekly options.
Also, watch for any changes in the short-term interest rate direction. If Carney hints at a shift—even a small one—traders might adjust their positions, leading to noticeable movements in the CAD curve. There may also be opportunities to compare CAD against other commodity-linked currencies.
Throughout this process, staying disciplined is crucial. Avoid getting caught off-guard by trying to make moves on unclear information. How the market reacts after the announcement, especially if it differs from initial reactions, can penalize those who are overexposed.
Risk is not constant; it’s gradually increasing, and the direction hinges more on tone rather than content.
European Commission dismisses reports that the EU will accept a 10% US tariff.
The European Commission has rejected claims that the EU will accept a 10% US tariff. They clarified that these claims are based on speculation and do not reflect current talks.
The EU has been clear in opposing US tariffs, which they see as unfair and illegal. Today, the euro rose by 36 pips to 1.1586, though it did drop slightly in the last hour.
The Commission’s brief statement highlights that there is no agreement, formal or informal, on tariff levels being discussed by Brussels and Washington. By using the term “speculative,” officials are pushing back against premature assumptions or rumors. They aim to keep their negotiating options open without escalating an already sensitive situation.
The earlier rise in the euro showed some optimism that a softer US approach might lead to a deal. However, the price drop towards the end of the session suggests that market participants, who may have been excited by rumors, are now reconsidering after the Commission’s clarification. The timing of this price change, right after the Commission’s statement, supports this view. Traders who followed the initial rise may now be reassessing their positions due to uncertainty.
In uncertain times like this, decisions should be based on verified information. Short-term bets, especially those based on a single news item, can be risky. We need to rely more on implied volatility data and watch how prices in the 1.1550–1.1620 range behave over the next few sessions.
A slightly wider spread between options suggests the market is preparing for bigger price swings but hasn’t decided on a specific direction yet. As next week’s talks approach, updates may leak unpredictably. It’s better to focus on structures that respond to volatility around these events instead of getting caught in unrealistic trades.
Prices could move quickly based on the tone of comments from officials—either becoming more firm or showing some flexibility. Our advantage lies in closely monitoring confirmed changes in tone rather than pursuing unestablished positions.
When prices reverse swiftly after political comments, it’s also important to observe trading volume. The euro’s early move happened with average trading volume, while the later drop showed stronger selling pressure, often a sign of institutions repositioning rather than late responses from retail investors.
For those managing calendar or diagonal setups near expiration, there’s still enough time value to wait for more clarity but not so much to be complacent. If risk-reward ratios become too tight, rolling strategies might offer better options and keep exposure limited while adjusting to any sudden shifts.
This is not the time to reshape overall narratives but to adjust positions based on current knowledge—and right now, what we know is that speculation remains just speculation.
UOB Group analysts predict the USD/JPY may reach 145.00, with strong resistance at 145.50
The US Dollar might reach 145.00 against the Japanese Yen, but it’s unlikely to push past the tougher barrier at 145.50. Over the long run, the Dollar is expected to move between 143.00 and 145.50.
Last Friday, predictions of a further Dollar drop were incorrect, as it bounced back to 144.48. This momentum indicates a possible test of 145.00, but reaching 145.50 seems unlikely. There is support around 144.00 and 143.50.
