NZD: Potential For A Pullback

In today's Asia-Pac session, TYM5 is 110-16+, -0-001 from closing levels. 

• Expectations that the April 2 reciprocal tariffs would be flexible, with breaks to countries and sectors as suggested Friday, and would not be as onerous as the more sweeping measures initially threatened underpinned US equities. Indeed, stocks took in their stride with other comments from President Trump about expecting auto tariffs.
• Beliefs that the worst may be over for stocks added to the buying momentum, as did the better-than-expected rise in the S&P Global Services PMI.
• Stocks surged, extending Friday's rally, with NASDAQ’s 2.25% jump leading the way. The S&P 500 was 1.75% higher, with the Dow ~1.5% higher.
• The strong risk-on move weighed heavily on US tsys. Concession building ahead of the $183bn in auctions this week added to the selloff, as did the somewhat hawkish comments from the Fed's Bostic, though he is not a voter.
• US 2- and 10-year yields were up 9 bps to 4.03% and 4.33% respectively.

Oil prices were higher boosted by US President Trump’s threats to impose a 25% “secondary” tariff on any country that imports Venezuelan crude. He has now signed the order to allow this to go ahead. He has already told Chevron to wind down its operations there but extended its licence.

• WTI jumped 1.3% to $69.16/bbl, close to the high of $69.33, as it also found support from hopes of more targeted tariffs on April 2 which drove an equity rally. It is now down just 0.3% this month and has trended higher since March 11. The benchmark has started today around $69.22. The bear trigger is at $64.85 and key resistance at $72.91.
• Brent rose 1.3% to $73.10/bbl after a peak of $73.17 and is now 0.4% higher in March. Despite this the primary trend direction is still down. Moving average studies remain in bear mode. Initial support and bear trigger is at $68.33, while pivot resistance is at $72.82, 50-day EMA.
• Chevron has been given until May 27 to withdraw from Venezuela which capped the rally. This could impact the nation’s output by around 200kbd, according to Kpler estimates. Its production has trended lower over the last decade but was around 1mbd in January/February. Trump cited migration and criminal gangs as his reason for targeting the country.
• This could affect the EU but with only 0.4% of its petroleum-related imports from there, finding another source shouldn’t be difficult though with the US is its largest supplier.
• Venezuela produces heavy crude which feeds US Gulf refiners’ production lines, so there could be disruptions, according to Bloomberg. Prices of heavy grades are higher given low inventories with Canadian facilities under seasonal maintenance.  

10000 of TUM5 traded at 103-12 1/4, post-time 20:44:45 GMT. The contract closed the session at 103-12 1/8 and has re-opened the Asia-Pac session at 103-12.