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On June 18th, Chaos Tiancheng Futures reported that the Federal Reserves June interest rate meeting caused significant market volatility. The overall meeting and statement clearly shifted towards a hawkish stance, while Warshs relatively neutral remarks exacerbated market fluctuations. Subsequently, US President Trump stated that the Fed would maintain interest rates unchanged, which was fine. (Regarding the possibility of a Fed rate hike) This could happen. After the meeting, market expectations for a rate hike rose, and the US dollar index surged, surpassing the 100 mark. Currently, for precious metals, although the meeting showed a hawkish bias and rate hike expectations rose, the market was relatively prepared and anticipated. The decline was completed in the short term, but this mornings news of the US-Iran memorandum led to a recovery of half of the decline, effectively ending short-term trading opportunities. Further developments still require observation of the driving forces, most importantly geopolitical tensions. Given the current increased market volatility, there are no clear trend conditions. (This content and opinion are for reference only and do not constitute any investment advice.)The Federal Reserve kept its policy rate unchanged but predicted a rate hike this year. A chart provides a quick overview of the pre-market gold and silver prices, converted between domestic and international markets.On June 18th, a research report from CICC stated that the Federal Reserve maintained interest rates unchanged at its June meeting, in line with market expectations. The biggest change at this meeting was the reform. The monetary policy statement was significantly simplified, and forward guidance was removed, aiming to reduce the Feds intervention in the market. More importantly, five working groups were established: communication, balance sheet, data, productivity and employment, and an inflation framework. This reshapes the policy framework from fundamental principles, laying the institutional groundwork for Warshs conservative and market-oriented policy approach. The balance sheet assessment was ranked second, indicating that balance sheet reduction remains a core inclination. Regarding policy this year, Warsh did not provide clear guidance, but the dot plot clearly turned hawkish: the average forecast predicts one rate hike this year, reflecting that with stable employment and high inflation, combating inflation has become the focus. We maintain our judgment that the Fed will neither raise nor lower interest rates this year, but note the increased risk of a rate hike next year. If the US economy continues to strengthen and achieve a full recovery driven by AI capital expenditure, the possibility of monetary tightening cannot be ruled out.According to The Information, Google DeepMind researcher Norm Shazel will be joining OpenAI.June 18th - According to NewsNation, Republican members of Congress have begun blaming Vice President Vance, accusing him of reaching a "bad" deal with Iran. One Republican congressman stated, "Conservatives in Congress are appalled that Vance reached such a terrible deal, erasing all of Trumps military victories. Trump had effectively won the war, and Vance lost it at the last minute through negotiations." Earlier today, President Trump joked, "If we reach a deal, the credit is mine; if we dont, blame Vance." Trump praised the agreement with Iran during his visit to France and signed a copy of the memorandum of understanding in Versailles. A source close to the White House responded to the congressmans comments, saying that the unnamed Republican congressman dared to be so audacious as to attempt to strip the president of his power in order to undermine and obstruct his peace agreement.

WTI crude oil climbs above $80.00 as NFP and recession fears contend with an OPEC+ surprise

Daniel Rogers

Apr 07, 2023 11:36

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As energy markets celebrate the Good Friday holiday, WTI crude oil prices remain stable around $80.50, poised for a three-week uptrend. In doing so, black gold defends the week-beginning gains provided by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, headed by Russia, known as OPEC+, who announced a surprise output cut. However, concerns of a recession and a cautious disposition ahead of the March US employment report have recently posed a challenge to the energy benchmark.

 

The OPEC+ group startled the market with a voluntary output decline of nearly 1.66 million barrels per day. The International Energy Agency (IEA) stated, in response to the OPEC+ announcements, that the OPEC+ decision to reduce oil output risks aggravating a stressed market by driving up oil prices in response to inflationary pressures.

 

On the other hand, the US Dollar's weakness, bolstered by disappointing US data, supported the recovery of the black gold.

 

In spite of this, the US Dollar Index (DXY) has a four-day losing streak and is currently trading around 102.000.

 

Initial Jobless Claims for the week ending March 31 increased to 228K from 200K expected and an upwardly revised 246K the previous week. Notable is that the Challenger Job Cuts for the given month increased from 77,77K to 89,703K. Previously, US JOLTS Job Openings fell to a 19-month low in February, and March's ADP Employment Change figures of 145K also disappointed markets. In addition, the US ISM Services PMI for March decreased to 51.2 compared to 54.5 anticipated and 55.1 previously.

 

China's optimism for economic development and optimistic activity data from the dragon nation could also support the oil price. Pan Gongsheng, the director of China's State Administration of Foreign Exchange (SAFE), stated on Friday that Beijing "will defend itself against external financial market shocks and risks."

 

It should be noted, however, that recent calls for a recession pose a challenge to WTI crude oil purchasers, and more signs of economic decline should be monitored for direction, particularly when commodity prices trade near the key short-term resistance line.

 

In addition to the news about the recession, the March US employment report will be crucial to monitor for direction. Analysts anticipate a decline in headline Nonfarm Payrolls (NFP) to 240K from 311K previously, with the unemployment rate remaining unchanged at 3.6%. However, the contradictory forecasts for Average Hourly Wages make the outcome even more intriguing.


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