In terms of how this will impact production for the bloc, it isn’t going to do anything. The members are well in compliance with current output levels already, so this will just continue to keep things as it is. If anything else, only Saudi Arabia and UAE are the two countries with any real spare capacity so that tells a lot about the situation involving OPEC+ at the moment.

Oil prices are responding well though as this could be a sign that OPEC+ are done with the moderate increases in output – which were aimed at appeasing the US perhaps. WTI crude oil is now up 1.4% on the day to $95.10.

This article was written by Justin Low at www.forexlive.com.

WTI crude is holding at key support still as seen above, although price did break below its 200-day moiving average (blue line) earlier in the week. Sellers are looking to push the agenda but buyers have been stubborn around the support region around $93.50 on the daily chart.

OPEC+ is said to be considering an output increase of around 100k to 400k bpd today but really, does it matter? In June, compliance for the bloc was 320% so this is really nothing as compared to what they cannot pump out at the moment. The fact of the matter is that the bloc just cannot produce more.

I’m still an oil bull as the backdrop of declining inventories (also at very low levels) and waning supply conditions are still massive tailwinds for the commodity. But recession risks are a key headwind to deal with and that won’t go away any time soon either.

There is a strong case for oil to push back well above the $100’s but sometimes, you have to respect the charts.

This article was written by Justin Low at www.forexlive.com.

Wang Yi says that US politicians who „openly play with fire on the Taiwan issue will come to no good end“ as China continues to step up its warnings against US House speaker, Nancy Pelosi’s visit to Taiwan today.

Again, these warnings serve as a pin to keep markets more on edge at the moment but at the end of the day, it will come down to the actual Chinese response to the matter. That is what will be the key thing to watch for risk trades.

This article was written by Justin Low at www.forexlive.com.

• Beijing said to ready countermeasures to Pelosi’s Taiwan visit, including military actions
• US jet believed to be carrying Pelosi delegation take the long way round to Taiwan
• Chinese foreign minister Wang Yi delivers warning ahead of Pelosi visit to Taiwan
• Dollar and yen hold firmer as US-China tensions weigh on sentiment
• RBA raises cash rate by 50 bps to 1.85%, as expected
• RBA takeaway: Time to slow down?
• UK July Nationwide house prices +0.1% vs +0.3% m/m expected

Markets:

• JPY leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.6%
• US 10-year yields down 5 bps to 2.55%
• Gold up 0.4% to $1,778.53
• WTI crude up 0.8% to $94.60
• Bitcoin down 0.8% to $22,933

US-China tensions are keeping markets on edge today as all eyes are on US House speaker, Nancy Pelosi’s visit to Taiwan. The aircraft believed to be carrying her delegation is en route to Taipei, taking the long way round after her visit to Kuala Lumpur.

With there being a sense of apprehension and anxiety, safety flows dominated as equities retreated while bonds were bid on the session. Meanwhile, the dollar and yen firmed with the former in particular advancing notably across the board.

EUR/USD fell from 1.0270 to 1.0215 while GBP/USD retreated from 1.2255 to 1.2186 before keeping just above 1.2200 now, but still down 0.2% on the day. USD/JPY itself is down 0.6% to 130.80 levels but is off earlier lows from Asia with the range in Europe being around 130.60 to 130.90 for the most part.

The antipodeans bore the brunt of the risk retreat with the aussie facing a double-whammy after the RBA was seen as less hawkish, opening the door to a slower pace of rate hikes moving forward. AUD/USD fell from 0.7015 to 0.6965 initially before falling further to 0.6915 as risk sentiment deteriorated. Meanwhile, NZD/USD fell from 0.6335 to 0.6275 and is set to snap a run of four straight days of gains.

The focus in the session ahead will be on China’s response to Pelosi’s visit and what comes next in US-China tensions in general. But keep in mind that USD/JPY and the bond market are still going to be key drivers regardless in trading this week.

This article was written by Justin Low at www.forexlive.com.

Even prior to the focus in the past few sessions on Pelosi’s visit to Taiwan, the break lower in USD/JPY and Treasury yields was already taking shape since last week. The fact that markets are feeling apprehensive amid US-China tensions is also adding to the gravitational pull on both fronts.

I’ve put up these charts many a time since the Fed meeting and I’ll put them up again here as a reminder that we are seeing a shift in market sentiment after months of driving on the other side of the street. USD/JPY has been on a tear since March in a rally from 115.00 all the way towards 139.00 last month. But the break lower in the past few days is rather significant:

The pair is on course for a fifth consecutive daily decline, its first since the end of last year and has taken out some notable support levels on the way to targeting its 100-day moving average (red line) at 130.21 currently.

The subtle shift by the Fed last week is a key driver but that has also translated to a material move in the bond market. 10-year Treasury yields has fallen to its lowest in almost four months and has taken out its 100-day moving average (red line) as well as neckline support (white line) and the swing lows near 2.70%:

I can’t stress how big of a technical break that is but the fact that yields are continuing to freefall is a testament to the momentum in play at the moment.

Despite all the focus on US-China tensions today, central banks are still the main driver of markets for now and the RBA’s subtle shift today is also symbolic in the sense that it marks the next chapter in the tightening cycle. The BOE is up next on Thursday and then the focus will shift back towards the Fed outlook with US non-farm payrolls on Friday.

This article was written by Justin Low at www.forexlive.com.

Equities are keeping lower on the day while bonds are firmer as market participants are feeling anxious amid US-China tensions. All eyes are on US House speaker, Nancy Pelosi’s visit to Taiwan with the jet believed to be carrying her delegation is seemingly en route to Taipei now.

China warned of potential military actions in response but I reckon markets will breathe a small sigh of relief just to know that Pelosi did arrive safely. I mean there are murmurs of flight safety concerns and while it isn’t something nice to say out loud, it is surely in the back of people’s minds just in case.

That said, expect China to retaliate in some other form or way to this event. The magnitude of said response is going to set the tone for markets in the sessions ahead. I want to say that the trade would be to buy value, sell hysteria i.e. fade the fear but we will see.

European indices are mostly down 0.4% to 0.7% currently with S&P 500 futures down 27 points, or 0.7%, on the day. Elsewhere, Treasury yields are still looking heavy with 10-year yields continuing its recent technical break lower:

This article was written by Justin Low at www.forexlive.com.