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On August 11th, analyst James Glynn stated that the Reserve Bank of Australias revised economic forecasts indicate that the bank is approaching a comfortable level for its current policy. The unemployment rate path has been revised upwards; the RBA now expects the unemployment rate to reach 4.5% by December, higher than the previous forecast of 4.3%. The biggest change is in inflation. Overall CPI is now projected at 3.6% by December, lower than the previous forecast of 4.0%. The cut-off mean inflation rate has been revised downwards, projected at 3.3% by December, lower than the previous forecast of 3.5%, and is expected to reach 2.4% by June 2028. All these indicators suggest that the RBA is nearing the end of its tightening cycle.Reserve Bank of Australia Governor Bullock: The committee is seriously considering when it would be appropriate to raise interest rates.Maersk: Logistics operations in parts of Colombia are currently facing disruption due to the earthquake affecting multiple regions.August 11th - InvestingLive, a US financial website, reported that the Reserve Bank of Australias (RBA) interest rate decision was in line with expectations. The RBA did not express excessive concern about recent inflation trends, but its forward guidance did see some minor adjustments. While not explicitly pointing to further tightening measures, policymakers wanted the market to know that inflation risks are now skewed to the upside, no longer a two-sided risk scenario. Therefore, the wording of this statement was clearer regarding its policy priorities. The RBA also included a timeline, indicating that inflation is unlikely to fall back to its target level by the end of next year. This leaves some room for further rate hikes in the near future if necessary. The unanimous decision itself did not leave much room for traders to maneuver. Essentially, the RBA reiterated that they acknowledge the possibility of raising the cash rate again if necessary, but are not in a hurry to do so. Before the decision was announced, traders priced in a 97% probability of no change at this meeting. Therefore, this is more or less in line with market expectations.On August 11, Iranian President Manuel Pezechzian stated that his recent meeting with Irans Supreme Leader Mojtaba Khamenei lasted seven to eight hours, during which various topics were discussed in depth. Pezechzian also stated that the most important task at present is to prevent internal division, and that all of the enemys plans are aimed at creating division within Iran. Earlier that day, Pezechzian had also said that Mojtaba was in "very good health."

In a risk-on environment with a weaker US dollar, WTI consolidates weekly losses above $83,000

Alina Haynes

Sep 09, 2022 17:17

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The price of WTI crude oil is higher for the second day in a row while paring the weekly losses at the eight-month low on Friday during the Asian session. However, by the time of publication, the black gold has reached a new intraday high of around $83.50.

 

Recent news reports from the US Treasury Department regarding the oil price cap appear to have helped drive up energy prices together with stronger sentiment and a weaker US dollar. According to the US Treasury source, "the oil price cap should be set above the marginal production cost, taking into account past Russian oil prices."

 

In other news, stronger sentiment and slow US Treasury yields cause the US Dollar Index (DXY) to fall intraday by 0.55%, to 109.05 at the latest. It's interesting to see that after a solid day, the US 10-year Treasury yields are still stuck around 3.32%, while the S&P 500 Futures tracks Wall Street's gains at approximately 4,020.

 

Recent market sentiment appeared to be aided by remarks made by US Treasury Secretary Janet Yellen, which suggested that trade relations between the US and China were set to improve. The market's attitude also appeared to have been aided by recently stronger US statistics and expectations that global central bankers will be able to offset the shock caused by inflation with a comprehensive strategy and higher rates. The Wall Street Journal (WSJ) article, on the other hand, raises some concerns about the future of China's technological enterprises and casts some doubt on the optimism.

 

A price document examined by Reuters on Friday revealed that Kuwait has decreased the official selling prices for its oil grades for the month of October from the previous month. Before the present program ends in October, US Energy Secretary Jennifer Granholm said the administration of US President Joe Biden is considering whether additional releases of crude oil from the country's emergency stockpiles are necessary. Prior to that, a Department of Energy official reportedly told Reuters that the White House was only considering releasing the 180 million barrels from the US Strategic Petroleum Reserve (SPR) that the president had already stated.

 

It should be highlighted that the recent decline in China's inflation data, coupled with the hawkish central bank activities, presents a challenge to oil purchasers. Both China's Producer Price Index (PPI) and Consumer Price Index (CPI) show unfavorable results for August. However, compared to 2.8% market expectations and 2.7% in the prior year, the headline CPI declined to 2.5% YoY, and the PPI fell to 2.3% from 3.1% projected and 4.2% in the preceding year.


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