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Market news: The United States plans to halve tariffs on Canadian steel and aluminum in a trade agreement.On August 20th, US President Trump told reporters at the White House on the 19th that negotiations with Iran might resume "at some point," but Iran must completely abandon its nuclear weapons. When asked if the US would return to negotiations, Trump said, "Maybe at some point. But right now, I think the situation is very good." He then added, "The logic is simple, they have to completely give it up," and "Iran must never have nuclear weapons." Trump reiterated that the US "owns" and "completely controls" the Strait of Hormuz, and stated that Irans "occasionally launching drones does cause trouble."On August 20, Iraqi Prime Minister Zaidi, President Amidi, and Speaker of Parliament Khalbsi met separately in Baghdad on August 19 with visiting Iranian Islamic Parliament Speaker Qalibaf to exchange views on issues such as consolidating bilateral relations and easing regional tensions.On August 20th, Fxstreet analyzed that market expectations for interest rate hikes have declined significantly since the Federal Reserves July meeting. According to the CME FedWatch Tool, the market currently expects a 34% probability of a 25 basis point rate hike in September, down from about 60% three weeks ago; meanwhile, maintaining the current interest rate has become the clear benchmark scenario for the market. Against this backdrop, the key question facing the dollar is: were the three dissenting votes at the July meeting merely the hawkish stance of individual officials, or did they reflect a broader hawkish tendency within the FOMC? If the meeting minutes show that some officials who voted to maintain the current interest rate actually believed that the Fed might soon need to further tighten monetary policy, then expectations for a September rate hike could resurface. In this scenario, both US Treasury yields and the dollar could find support. However, the market reaction may still be relatively limited. Meeting minutes have a lag, and data released since the meeting has already changed the economic situation. Therefore, before the September meeting, investors may pay closer attention to upcoming US economic data and Warshs speech at the Jackson Hole Economic Symposium to reassess the Feds monetary policy outlook.Israeli Prime Minister Netanyahu: We will not tolerate the Turkish military presence in Syria that threatens Israel.

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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