Energy futures reversed their early gains yesterday after opening some 1 to 1.5% higher initially ahead of the European open. We proceeded to not only close the gap but also post a lower low than Friday’s trading range during the session which led to a negative US open. One of the reasons for the decline was the Spanish bond yield breaching 7%, a level that is unsustainable and leads to a bailout, or at least has done with regard to Ireland, Portugal and Greece. The other main reason was the lack of a definitive result in Greece as the New Democracy party will now struggle to form a government and also the simple fact that they wasn’t to renegotiate the bailout terms which Germany will not budge on. Turning to last night’s closing levels we see that Brent crude closed out the session at $96.05 down $1.56. WTI crude closed out the session at $83.27 down $0.76. Gasoil closed at $841.50 down $10.00, while UK Nat Gas closed at £53.87 down £0.40.
The Euro moved higher on Sunday evening hitting a high of 1.2751 before retreating throughout the European session where it traded down to 1.2517. The Spanish bond auction where they ended up paying above 7% for 10 year money really kicked off the Euro and in turn equities to the downside and after that initial move lower we struggled to find upward momentum. Currently we are trading at 1.2615 after hitting a low overnight of 1.2573. Immediate resistance to the upside for EUR/USD shows at recent session and June 07 highs at 1.2616/26, followed by Friday's Asian session highs at 1.2647, and Friday's high at 1.2670. For the downside nearest term support shows at Friday's lows 1.2592, followed by yesterday's lows at 1.2556, and Thursday's lows at 1.2540.
Equities opened much higher after the news of the Greek election but that optimism reduced dramatically during the day. In Europe the DAX jumped to 6339.5 after closing on Friday at 6270.0 but closed the gap during the European session as did the FTSE and the CAC. Looking at last night’s closing levels we see that the FTSE closed out the session at 5491.09 up 12.28, while the DAX closed at 6248.20 up 18.79. In the US the DJIA closed at 12741.82 down 25.35, while the S&P closed at 1344.78 up 1.94. Gold is trading at 1630.50, while Silver is at 28.78.
In economic data today we have UK CPI data where a number of 3% is expected, this is followed up with UK Retail Price Index data. Elsewhere in Europe we have German ZEW Confidence which is followed up in the afternoon with US Housing Starts and Building Permits.
For Brent crude we draw first resistance at $96.50, followed by $97.20. On the downside we draw first support at $95.50, followed by $95.00.
For Gasoil we draw first resistance at $846.00, followed by $850.00. On the downside we draw first support at $840.00, followed by $835.00.