Oil prices rose for a second day yesterday as Iran sanctions took hold and concerns about Saudi Arabia’s output continued. The weekly EIA crude inventory data are due later today and are expected to show a drawdown of 3.37 million barrels in the week to July 30, according to the latest survey of analysts, almost completely wiping out the increase of 3.8 million barrels seen last week. Yesterday API data on stockpiles showed a hefty drawdown of six million barrels.
Trade tensions remain in focus as the U.S. said it will begin imposing 25 percent duties on an additional $16 billion in Chinese imports in two weeks. It will be the second time the U.S. slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices. China’s trade surplus narrowed to CNY 176.96 billion in July, missing the estimated rise to CNY 280.90 billion from the previous month’s print of CNY 261.90 billion. The exports rose 6 percent year-on-year, narrowly missing the estimated rise of 6.4 percent. On the other hand, imports spiked 27.3 percent, bettering the 16.2 percent expected rise by a big margin.
Later today we will see the RBNZ Rate statement and press conference. The anticipation is for an unchanged rate but given mixed developments lately, officials are unlikely to alter their message from the latest policy meeting that a rate cut remains on the table, something that could keep the kiwi near current low levels moving forward.