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The Norwegian Offshore Authority: Statoil and its partners have discovered oil in the "POLYNYA TUBAEN" exploration target area. The discovered reservoir is estimated to contain between 14 million and 24 million barrels of crude oil.1. Bank of America: With both inflation and long-term growth expectations revised upwards, Powell may acknowledge the risks of stagflation while emphasizing a wait-and-see approach. 2. Morgan Stanley: Powell may choose to ignore energy-driven inflation, the dollar faces downside risks, and oil prices will play a central role in the foreign exchange market. 3. Trade France: With the risks of its dual mandate increasing, Powell is unlikely to provide clear guidance on the timing of interest rate cuts this year, instead continuing his data-dependent stance. 4. Rabobank: Under Powells leadership, the Fed is likely to maintain a wait-and-see approach, attempting to balance inflation risks and slowing growth. 5. Deutsche Bank: Powell is likely to emphasize that the Middle East situation primarily affects the economy through financial conditions, particularly volatile oil prices. 1. Deutsche Bank: Policymakers are expected to emphasize the significantly increased geopolitical uncertainty. 2. Morgan Stanley: The Federal Reserve is not expected to respond to the oil price shock by raising interest rates or hinting at the risk of such a hike. 3. RBC Capital Markets: The recent energy price shock is not enough to put a rate hike on the agenda, but may prompt the Fed to remain on the sidelines. 4. Rabobank: If the war situation worsens, the US economy will face the dual pressures of a sharp rise in inflation and a significant slowdown in growth in 2026. 5. Bank of America: With slowing employment and exhausted fiscal stimulus, rising oil prices will weaken consumer spending, creating conditions for the Fed to ease monetary policy. 6. ANZ: Uncertainty from the Middle East geopolitical situation is not expected to substantially change the Feds underlying fundamental assessment of falling inflation and cooling employment. 7. Commerzbank: As long as inflation expectations remain stable and the labor market continues to face downward pressure, the Fed is likely to temporarily ignore the temporary rise in oil prices. The Israel Defense Forces (IDF) recently detected a missile launched from Iran heading towards Israeli territory. Defense systems are operational to intercept the threat. In the past few minutes, the domestic frontline command has sent precautionary instructions to personnel in the affected areas via mobile phone.In an interview with Al Jazeera, Irans foreign minister said he understands the dissatisfaction of regional countries over the matter, but the United States should bear full responsibility for the war.

Before US Retail Sales, the US Dollar Index declines from a multi-year high due to cautious optimism

Daniel Rogers

Jul 15, 2022 11:33

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Bulls of the US Dollar Index (DXY), which hit a 19-year high earlier in the day at 108.65, find it difficult to gain momentum during Friday's Asian session.

 

The dollar index increased to a multi-year high against the six major currencies in reaction to recession fears and worries about the Federal Reserve's rapid rate hikes. However, the price decrease from the previous day was brought on by recent inconsistencies in Fedspeak and US statistics.

 

Among the most notable Fed speakers who sought to downplay the probability of an increase in interest rates were Christopher Waller, governor of the Federal Reserve, and James Bullard, president of the Federal Reserve Bank of St. Louis. Bullard of the Fed, however, noted that "up to this point, we've framed this conversation exclusively in terms of 50 vs 75." Reuters quotes Fed's Waller as saying that markets may have anticipated a 100 basis point rate increase in July too soon. It should be noted that the Federal Reserve will observe a blackout period before the July 28 Federal Open Market Committee meeting starting this weekend (FOMC).

 

The Producer Price Index (PPI) for final demand in the US increased to 11.3 percent on an annual basis in June, up from 10.9 percent in May, according to the US Bureau of Labor Statistics. This outcome was higher than the 10.7% market expectation. In addition, compared to the previous week's total of 235,000 and the market's projection of 235,000, there were 244,000 first claims for unemployment benefits for the week ending July 9. The number of weekly claims for unemployment rose to its highest level in five months.

 

It should be recalled that the previous day, DXY bulls were under pressure due to the shrinking spread between the 2-year and 10-year US Treasury rates. While 2-year bond coupons decreased by 0.75 percent to 3.12 percent, 10-year US Treasury rates finished Thursday at 2.95 percent, up 0.95 percent from the previous day. As a result, the difference between the coupons of short-term and long-term bonds shrank from 23 basis points (bps) on Tuesday to 17 bps.

 

The Wall Street benchmark had a mixed performance as a result of these moves, and as of press time, S&P 500 Futures had also seen moderate increases.

 

It will be vital to follow US Retail Sales, which are predicted to grow 0.8 percent MoM in June from -0.3 percent in May, in addition to watching Fed speakers for new encouragement. The Michigan Consumer Sentiment Index (CSI) preliminary readings for July, which are forecast to be 49.9 vs. 50.0 before, should therefore be watched for certain signs of future changes.


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