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Federal Reserves Logan: Inflation risks are tilted to the upside, and the robust job market is strengthening slightly.On July 31, Bank of England Chief Economist Hugh Peele stated that the sharp fluctuations in energy and commodity prices caused by the Iran war could continue into 2027, highlighting the risk that inflation may remain high for an extended period, forcing policymakers to take action. Peele said that developments in the Middle East and how they will ultimately impact the UK economy remain "extremely uncertain" and difficult to predict. He added that the Bank of England cannot currently determine the duration or scale of the conflict, as evidenced by the recent erratic nature of US-Iran negotiations. He said, "In April, one might have hoped that, despite the significant uncertainty, at least by July we would know where things were headed. But that uncertainty remains, and we may face continued sharp fluctuations in energy and commodity prices by the end of this year and into next year." Peele is one of the most hawkish members of the Bank of Englands Monetary Policy Committee and one of the three members who voted for an interest rate hike this week.The final reading of the University of Michigan Consumer Sentiment Index for July was 55.2, below the expected 54 and the previous reading of 54.4.The final reading of the University of Michigan Current Conditions Index for July was 54.8, below the expected 54.7 and the previous reading of 54.9.The final reading of the University of Michigan Expectations Index for July was 55.4, compared to a forecast of 53.8 and a previous reading of 54.

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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