Easy tiger
Are you an oil bull? From the Floor would like to share your enthusiasm but before we get too carried away, there's some 3,000 shale wells in the US champing at the bit to get going if oil prices rise any higher.
Global benchmarks Brent and WTI have both enjoyed something of a rally from last month's lows leading to "something of a consolidation" in the market, says Saxo Bank's head of commodities Ole Hansen.
"There's no point trying to close it on the downside but the loss of momentum overnight suggests that it may be approaching the point where it has gone as high as it can," he says, speaking live from the Copenhagen floor.
Hansen says easing tensions over Yemen where Saudi Arabia has ended its air strikes and today's upcoming EIA report took some of the wind out of the rally overnight but it is the prospect of yet more oil coming on line from the US that will really puncture this balloon.
"Those 3,000 uncompleted wells are just waiting for the signal from higher oil prices and that will limit the upside," he says, adding Brent looks likely to settle into a $50-70/barrel range for the rest of the year.
Brent was at $61.65/b at 0655 GMT. WTI crude was at $55.96/b.
If you are still a bull though, Hansen does see one chink of light down the line if oil prices remain low. "Prices need to rise to $80/b in order to attract investment to cover for depletion and if that doesn't happen, that could take something like 5 million b/d out of supply."
Get your 'risk-on'
Talking of risk taking, the prospect of a deal with Greece by the end of the month sent a bit of "risk-on" activity into the bunds markets sending them back below 160 before momentum gave way to see German bunds back above the line again.
"All focus remains on Greece and we expect volatility and uncertainty to stay into the weekend and through May when there are a number of key deadlines," says Michael Boye from Saxo Bank's Fixed Income desk.
Three-year Greek yields were hovering up 29% yesterday and were just below that in morning trading but peripherals markets were stable. "Contagion risks don't look as bad as was feared," says Boye.
AUD's ascent
The big winner overnight in the Asian session was the Aussie dollar which rose 35 pips against USD in the immediate aftermath of an upeat CPI report and was at 0.7776.
"A clear break of the 0.7775-0.7800 zone could see AUDUSD test the February and March highs of 0.7912 and 0.7938 respectively" says Singapore's Christoffer Moltke-Leth.
That left many speculating whether Reserve Bank of Australia chief Glenn Stevens would see through his implicit threat this week to implement a rate cut next month with the market putting it "a 50/50 call," says Moltke-Leth.
The impact on one-month AUDUSD vols was to send them from 12.8 to 12.4.
"They've still some way to go before they are as low as before Steven's intervention," says Dan Larsen from Saxo's FX Options desk. "The move in Options would indicate that the market believes less in a cut than it did yesterday."
Larsen also draws attention to a spike in USDJPY vols overnight when spot quickly rose to 119.80 on the back of very good Japanese trade surplus data but as soon as the momentum gave way, vols too quickly receded. "We need 120, then 120.30 and 120.80 before we get a potential test of the 122 area," says Larsen.
EURUSD continues to drift in "no-man's" land, Larsen adds and with a liquidity shortage ongoing and Greek headlines simmering in the background, Larsen puts support at 1.0625 and resistance at 1.0840 and has a warning on the vols impact the liquidity shortage is having.
"EURUSD vols keep increasing as the market gets more reactive on the back of these relatively huge moves in the market on a daily basis," he says.
EURUSD was at 1.0768 at 0655 GMT.
Nurse, nurse!
From the Floor's picked up a few battle wounds in its time and likes nothing better than a period of rehabilitation in the local hospice.
It might come as no surprise then that the healthcare sector continues to thrive and is helping spark some serious mergers and acquisition activity.
"Across the board, you are seeing biotech, pharmaceuticals and healthcare companies performing particularly well," says Saxo Bank's head of equities Peter Garnry, ahead of results for Roche which is up 2% pre-market.
"We expect M&A to pick up and this underpins the whole underlying health of the health sector," he says.
Garnry has words of encouragement too for Tesco (LONDON:TSCO) which, despite revealing a £6.38 billion loss in London this morning, is still "in turnaround".
"If you strip out the one-off items it seems that they are stabliising and the fact that shares were up 2% pre-market seems to suggest investors are clearly happy," he says.
Elsewhere, the Shanghai Composite index brushed itself down after the stutters earlier this week to hit a fresh seven-year high and DAX continues to revolve around the 12,000 mark like a moth around light.