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Angola plans to launch its next round of oil licensing bidding in the fourth quarter to maintain crude oil production above 1 million barrels per day (bpd). This bidding round will be the final under a multi-year strategy launched in 2019 to grant 50 oilfield development rights to Africas third-largest crude producer. "Our goal is to achieve 1 million bpd next year," Minerals, Oil, and Gas Minister Diamantino Azevedo said in a statement on Sunday. "Most of our countrys oilfields have mature wells, and the solution is to find new reservoirs." This round of bidding is part of the governments efforts to attract investment in the oil industry. In July, Angolas daily crude oil production fell below 1 million bpd for the first time since its exit from OPEC in 2023.On September 7, OPEC+ agreed to increase production again in October. Amid weakening global demand, the Saudi-led OPEC group is pressing ahead with a six-month plan to regain market share. This decision will put pressure on oil prices, further confirming that Saudi Arabia has given up on pursuing higher prices and is focused on increasing revenue by restoring as much idle production as possible. Eight OPEC members, including Saudi Arabia, Iraq, and the UAE, said they will increase production by a total of 137,000 barrels per day next month. However, analysts say only Saudi Arabia and the UAE will be able to increase supply because most other members are already close to their production capacity limits. People familiar with the matter said that for Saudi Arabia, the political and economic costs of maintaining production cuts are too high. By quickly restoring production, Riyadh will also be able to assess the production capacity of each member country for possible future renegotiation of quotas.With a September Federal Reserve rate cut all but certain, options traders are widely betting on a stable stock market ahead of Thursdays CPI data. However, this bet could be risky if the data shows rising inflation. The markets rationale for a rate cut is straightforward: US job growth is stagnant and the economy needs stimulus. Fridays weak jobs data reinforced this expectation, prompting investors to fully price in a 25 basis point rate cut from the Fed next week. The markets reaction has been muted: US stocks fell slightly on Friday, and the fear gauge edged up slightly, but remains well below the critical 20 level, where it has mostly remained since June. Looking ahead, options traders are betting on a roughly 0.7% two-way move in the S&P 500 following Thursdays CPI release, below the 1% average realized move over the past year. However, this trade ignores a key risk: what if inflation figures significantly exceed expectations? "Its a very delicate balance right now," said Eric Teal, chief investment officer of Comerica Wealth Management. "Any data thats very positive or very negative could change the market outlook."On September 7, U.S. Treasury Secretary Jeffrey Bessant stated that the United States and Europe are discussing a new round of sanctions and secondary tariffs against Russia, hoping that the "collapse" of the Russian economy will prompt Putin to engage in peace talks with Ukraine. "We are ready to increase pressure on Russia, but we need the cooperation of our European partners," Bessant said. He also stated that President Trump and Vice President Cyril Vance spoke with European Commission President Ursula von der Leyen on Friday, and that von der Leyen subsequently discussed sanctions with Bessant.Israel Airports Authority: The first flight from Ramon Airport to Tel Aviv will take off soon.

USD/CAD declines to 1.3500 on firmer Oil prices, BoC concerns over US inflation, and Fed Minutes

Daniel Rogers

Apr 10, 2023 14:35

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The USD/CAD maintains losses close to 1.3500, shattering a four-day winning trend, as traders brace for key Easter Monday data/events on major bourses. However, the recent decline in the Loonie-U.S. dollar exchange rate may be due to the increase in the price of WTI petroleum oil, Canada's primary export. In contrast to the recent increase in ardent Fed forecasts, the Bank of Canada's (BoC) dovish bias poses a challenge to pair sellers.

 

After increasing for three consecutive weeks, WTI crude oil prices gain 0.61 percent intraday near $80.00. Recent increases in the price of black gold may be due to geopolitical concerns surrounding China and Taiwan. In addition to the supply cut by OPEC+ and the faltering US dollar, the energy benchmark is sustained by the supply cut by OPEC+ and the weakening US dollar.

 

However, the US Dollar Index (DXY) has fallen for three consecutive weeks and is under pressure near 102,000.

 

Fears of higher Fed rates versus inaction from the Bank of Canada (BoC) grew after the upbeat US Jobs report versus the lack of significant positives in the March Canadian jobs report.

 

As a result, the CME's FedWatch Tool indicates a 69% chance of a 0.25 basis point rate hike in May, up from 55% prior to the US employment report.

 

Canada's headline Net Change in Employment increased to 34.7K in March from 21.8K in February, compared to the market consensus of 12K, while the Unemployment Rate came in at 5% versus the analysts' estimate of 5.0%. During the specified month, the Participation Rate decreased to 65.6% from the expected and previous rate of 65.7%. In addition, the average hourly wage fell 5.2% year-over-year in March, down from 5.5% in February.

 

In contrast, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 236K in March, the lowest increase since January 2021 (considering revisions), compared to the expected 240K and the previous 330,000. Additionally, the unemployment rate fell from 3.6% to 3.5%, while the labor force participation rate rose from 62.6% to 62.6%. The annual wage inflation rate decreased from 4.6% to 4.2%, below market expectations of 4.3%.

 

Futures on US equities ended higher, but yields remain under pressure ahead of the crucial BoC monetary policy meeting, US inflation, and Fed Minutes. Given the dovish concerns from the Bank of Canada (BoC) and the likely hawkish comments in the FOMC Minutes, the USD/CAD may see additional gains, barring any unexpected developments.


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