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On September 18th, according to foreign media reports, several officials, including those from the Reserve Bank of Australia (RBA), attended a parliamentary hearing. Governor Bullock stated that inflation risks are tilted to the upside; Deputy Governor Hauser stated that the committee is fully committed to achieving its inflation target. Both statements signaled a potential rate hike, while UBS believes that a September rate hike will not be the last. UBS expects the RBA to raise rates twice more, ultimately pushing the cash rate to 4.85%. This rate path is significantly more hawkish than the markets current pricing in a single rate hike in September. Market pricing indicates a 70% to 75% probability of a 25 basis point rate hike by the RBA in September. If UBSs assessment gains market acceptance, the Australian dollar and short-term yields may rise further in the coming months.Following the Bank of Japans decision, the price of Japanese 30-year government bonds erased its previous gains.September 18th - Nikkei futures extended gains as the yen weakened after the Bank of Japan raised its policy rate by 25 basis points to 1.25%, a move widely expected. The Bank of Japan stated that underlying inflation is approaching its 2% target and that it will closely monitor Middle East conflicts, the yens exchange rate, and demand for artificial intelligence. Investors are now focused on Governor Kazuo Uedas press conference later on Friday for clues about the pace of future rate hikes.Following the Bank of Japans interest rate hike, gains in benchmark 10-year Japanese government bond futures narrowed, with the latest increase being 0.22 yen.SK Hynix shares rose 5%.

WTI advances toward $75.00 as China-related demand optimism offsets recession fears

Daniel Rogers

Jan 09, 2023 11:55

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In the early hours of Monday, WTI steadily climbs near the intraday high of $74.70 as bullish emotion competes with economic slowdown worries. Despite this, the weaker US Dollar and a light schedule allow buyers of black gold to maintain control following Friday's mixed performance.

 

In spite of this, the risk profile remains elevated in light of China's reopening of its borders after a three-year closure. On the same line, Guo Shuqing, party secretary of the People's Bank of China, made his remarks (PBOC).

 

Reuters, transmitting China unlock news, claimed that "about 2 billion journeys are anticipated this season, roughly doubling the volume of previous year, and recovering to 70% of 2019 levels," citing a statement from the Chinese government.

 

On the other side, PBOC's Shuqing stated, "The world's second-largest economy is likely to recover rapidly due to the country's optimal Covid-19 response and the continued implementation of its economic policies."

 

The US Dollar Index (DXY) fell the most in three weeks the day before, down 0.20% intraday to 103.70 as of press time, as the US employment report failed to excite greenback purchasers and the US activity numbers stoked fears of an economic slowdown. It's worth mentioning that the previous day's disappointing US wage growth, ISM Services PMI, and Factory Orders weighed on Treasury bond yields and the DXY.

 

On a different page, reports regarding a delay in the restoration of the colonial pipeline and the Russia-Ukraine conflict appear to also benefit energy buyers. Traders fear additional rate hikes ahead of the release of the Consumer Price Index (CPI) for December from China and the United States on Wednesday and Thursday, respectively, which tests the positive momentum.

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