Red Sea attack alarms oil traders
Global markets were mostly weaker while the US dollar remained near recent highs as ongoing Middle East tensions weighed on risk sentiment.
The escalation in tensions continued overnight after Houthi militants said they had attacked two Saudi Arabian oil tankers in the Red Sea, raising concerns about further disruptions to energy supplies.
Brent crude gained 3.4% overnight and now trades at USD94 per barrel.
US shares fell, with the tech-focused Nasdaq leading losses, while the USD index remained near 14-month highs.
Across markets, EUR/USD gained 0.1% ahead of tonight’s European Central Bank meeting. GBP/USD fell 0.1%, while NZD/USD lost 0.2%.
AUD/USD was flat ahead of today’s June employment report, with 15,000 new jobs forecast and the unemployment rate expected to remain steady at 4.4%. Australian jobs data is due at 11:30am AEST.
Saudi nuclear deal adds to risks
In related geopolitical news, President Donald Trump is expected to approve a 30-year civilian nuclear cooperation agreement with Saudi Arabia, according to a Wall Street Journal report citing administration officials. The deal would allow US companies to play a major role in developing Saudi Arabia’s nuclear infrastructure.
Reports also suggest it may pave the way for uranium enrichment capabilities in the kingdom, raising concerns about nuclear proliferation in an already tense Middle East.
Heightened geopolitical uncertainty has weighed on risk-sensitive currencies such as AUD/USD. Immediate resistance for AUD/USD is seen at 0.7050. On the downside, the 21-day EMA at 0.6977 remains key support, followed by 0.6950. Meanwhile, AUD/JPY has climbed to its highest level in a month.
USD/JPY surge keeps intervention fears in focus
USD/JPY has pushed above 163, increasing speculation that Japanese authorities may step in to support the yen. However, any intervention remains difficult to predict and even harder to trade. Key factors that could change the outlook include coordinated action by policymakers, fresh domestic investment measures from Japan’s Government Pension Investment Fund (GPIF), or stronger official warnings against further yen weakness.
Until then, the current trend remains intact, with market participants continuing to test policymakers’ tolerance for a weaker yen.
Elsewhere, USD/CNH remains near a three-year low on a longer-term horizon. A break above the 21-day EMA at 6.7816 could open the door to the 50-day EMA at 6.7925. Support is located at the key psychological level of 6.7700.
Aussie flat ahead of June jobs numbers
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 20 – 24 July
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
