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Spains manufacturing PMI for July was 50.2, in line with expectations of 50 and the previous reading of 49.7.August 3 – Swiss inflation slowed to its lowest level in four months in July, showing resilience amid rapidly rising costs driven by energy prices across Europe. Data from the Swiss National Statistical Office showed that the Consumer Price Index (CPI) rose 0.4% year-on-year in July, down from 0.5% in June and in line with economists median forecast. Cost pressures from rising diesel and heating oil prices were offset by lower prices for a range of goods and services, including clothing and car rentals. Core inflation, excluding volatile factors such as energy, remained at 0.3%. The latest data contrasts with the Swiss National Banks (SNB) previous forecast of a moderate, temporary acceleration in inflation. According to sources, based on the current weak inflation trend, the SNB internally expects interest rates to remain at zero until the end of next year, barring any new shocks.Futures News, August 3rd: Shanghai Futures Exchange (SHFE) Energy and Chemical Warehouse Receipts and Changes on August 3rd: 1. Pulp futures warehouse receipts: 356,739 tons, an increase of 3,672 tons compared to the previous trading day; 2. Pulp futures mill warehouse receipts: 20,000 tons, unchanged compared to the previous trading day; 3. Offset paper futures warehouse receipts: 2,758 tons, unchanged compared to the previous trading day; 4. Offset paper futures mill warehouse receipts: 6,520 tons, a decrease of 80 tons compared to the previous trading day; 5. Fuel oil futures warehouse receipts: 1,696 tons. 0 tons, unchanged from the previous trading day; 6. Petroleum asphalt futures warehouse receipts: 11,290 tons, unchanged from the previous trading day; 7. Petroleum asphalt futures factory warehouse receipts: 18,210 tons, unchanged from the previous trading day; 8. Medium-sulfur crude oil futures warehouse receipts: 2,961,000 barrels, unchanged from the previous trading day; 9. Low-sulfur fuel oil futures warehouse receipts: 5,000 tons, unchanged from the previous trading day; 10. Low-sulfur fuel oil futures factory warehouse receipts: 0 tons, unchanged from the previous trading day.August 3 – Following the Houthi threat that disrupted regional shipping, Yanbu, a key Saudi export port on the Red Sea coast, appeared to be experiencing its busiest day yet. Meanwhile, an increasing number of ships turned off their tracking signals as they passed through the vital Bab el-Mandeb Strait. Satellite imagery showed five Very Large Crude Carriers (VLCCs) docked at Yanbus oil loading terminal on Saturday, potentially marking the ports most active day since the Iranian-backed Houthi blockade of Saudi ports two weeks ago. These photos were taken by the EUs Sentinel-2 satellite. Because the satellite only passes through the area every few days, continuous monitoring is not possible. Yanbu has become a crucial node for Saudi Arabia to maintain large-scale crude oil exports after the war with Iran severely impacted shipping through the Strait of Hormuz. Saudi Arabia bypasses the Strait of Hormuz by transporting millions of barrels of crude oil daily to the Red Sea via pipelines for export to global markets.Shares of UK-listed energy companies fell, with Ithaca Energy down 4.1%, BP down 2.9%, and Shell down 2.1%.

USD / JPY fluctuates above 133.00, and a decline appears likely as the Fed continues its gradual rate hikes

Daniel Rogers

Mar 14, 2023 14:07

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The USD / JPY currency pair is fluctuating above 133.00 during the Asian session. The asset has recovered from 132.50 but is unable to extend gains due to the lack of strength in the US Dollar Index (DXY) following the Silicon Valley Bank (SVB) debacle. The loss of market participants' confidence in the United States banking system has drastically diminished the appeal of safe-haven assets.

 

Futures for the S&P 500 have recovered a portion of Monday's losses, indicating a slight improvement in market sentiment. The USD Index is attempting to reclaim the immediate resistance level of 103.80, but the upside appears constrained due to expectations that the Federal Reserve will continue its modest rate increase cycle (Fed). The USD Index has been impacted by the market's reduction of 50 basis points (bps) in expected rate increases.

 

In the meantime, the demand for U.S. government bonds is declining, which may indicate a transition away from safe-haven assets. The yield on 10-year US Treasury bonds has risen above 3.56 percent.

 

Tuesday's release of United States Consumer Price Index (CPI) data would be a major market mover. Analysts at Wells Fargo anticipate "another 0.4% monthly increase in the aggregate CPI in February, bringing the annual rate to 6.0%." We still anticipate a decline in inflation, but the process is likely to be irregular and lengthy. Despite some direction improvement over the past few quarters, prices continue to rise well above the Fed's 2% objective, and the constrained labor market suggests that inflationary pressures may prevent a full return to 2%.

 

Hirokazu Matsuno, the chief cabinet secretary of Japan, stated on Monday that they do not anticipate the SVB fallout to have a significant impact on the country's financial institutions. He added, "Japan's financial institutions have adequate liquidity and capital base overall."

 

The minutes of the Bank of Japan's (BoJ) most recent monetary policy meeting, which was conducted by former BoJ Governor Haruhiko Kuroda, will be attentively examined going forward.


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