AUD/USD: pair has approached the support zone of 0.6489–0.6447During the Asian trading session, the AUD/USD currency pair is approaching the important support zone of 0.6489–0.6447 against the background of American statistics.Last week was marked by the publication of inflation data in the United States, which contributed to the strengthening of the US dollar in the market. The US consumer price index in March showed a monthly increase of 0.4%, which exceeded analysts' expectations of 0.3%, and the annual index was 3.5%, also higher than the predicted 3.4%. The producer price index increased by 2.1% year-on-year, from the previous 1.6%, although analysts expected an increase to 2.2%, while the monthly index decreased from 0.6% to 0.2%, ahead of forecasts of 0.3%. The core inflation rate rose from 2.1% to 2.4%, while the forecast was 2.3%. These data have increased doubts about the Federal Reserve's willingness to cut the rate by 25 basis points in June.The Australian economy also showed weak results: the number of construction permits issued fell by 1.9% monthly, which is in line with forecasts, while the previous figure was revised from -1.0% to -2.5%.Resistance levels: 0.6629, 0.6657, 0.6859.Support levels: 0.6489, 0.6447, 0.6353, 0.6285.Gold market analysisThe price of gold has stabilized around the level of 2350.00. Last week, gold reached a historic high, rising to the level of 2430.00, however, the bulls failed to hold this position, and many traders decided to realize the accumulated profits.The rise in gold prices continues to be supported by geopolitical instability and forecasts for rate cuts by the world's largest central banks. The European Central Bank is expected to lower interest rates as early as June, while the US Federal Reserve is likely to ease monetary policy later, with the first rate cut of 25 basis points expected in September.The latest macroeconomic data from the United States, published on April 12, increased pressure on the US dollar. The University of Michigan consumer confidence index fell from 79.4 to 77.9 points in April, which was lower than analysts' expectations of 79.0 points. The March import price index increased by 0.4%, accelerating by 0.1% compared to February, and on an annual basis the indicator also increased by 0.4% after a noticeable decrease of 0.8% a month earlier. Today, traders will closely monitor the March retail sales statistics in the United States, growth is expected to slow to 0.3% from February figures. The April index of business activity in the manufacturing sector from the Federal Reserve Bank of New York will also be published, an improvement from -20.9 to -9.0 points is projected.Resistance levels: 2375.00, 2400.00, 2431.44, 2450.00.Support levels: 2353.79, 2336.50, 2320.00, 2300.00.Cryptocurrency market analysisThe price dynamics of bitcoin tried to rise, breaking the 72000.00 level, but by the end of the week it fell sharply, losing about 14.5% of its value due to increased geopolitical tensions in the Middle East.Over the weekend, Iran conducted missile strikes against Israel, which led to investor fears about the possible outbreak of a large-scale military conflict, which, in turn, contributed to the reorientation of investments in defensive assets such as gold and the US dollar. This downward trend affected not only Bitcoin, but also the wide cryptocurrency market, where in a few days there were liquidations of open positions totaling about $2.5 billion. In addition, the pressure on digital assets was influenced by monetary policy, as the chances of continued high interest rates by the US Federal Reserve increased amid renewed inflationary pressures.These events lowered the price of Bitcoin to a six-week low of 60400.00, after which its partial recovery began. Traders are returning to the market, hoping that there will be no further escalation of the Iranian-Israeli conflict, according to representatives of American diplomacy. In this context, a possible resumption of growth of the main cryptocurrency assets, supported by the expectation of an upcoming halving in the Bitcoin network, seems quite likely in the foreseeable future.Resistance levels: 68750.00, 71875.00, 75000.00.Support levels: 62500.00, 59375.00, 56250.00.Crude Oil market analysisAfter rising to 92.42 on Friday, Brent crude oil quotes are experiencing a correction to 89.85 amid reports that the Iranian attack on Sunday caused minimal damage to Israel's infrastructure.Last week, after aggressive statements by Iranian leaders, the price of oil exceeded 92.00, as market participants feared the expansion of the armed conflict beyond the region. On Sunday, more than 300 rockets and drones were fired at Israel, most of which were successfully shot down by the Iron Dome air defense system. Mohammad Bagheri, the head of the General Staff of the Iranian Armed Forces, said that the "True Promise" mission has been completed and no further attacks are planned. According to him, Iran adheres to the principles of the UN Charter and is not interested in escalating the conflict. Against this background, the quotes of Brent Crude Oil moved to a decrease.The geopolitical situation in the Middle East remains difficult, which may lead to high volatility in the oil market in the coming months. Given that Iran is a significant oil producer in OPEC with production of more than 3 million barrels per day, the risks of supply interruption associated with sanctions and potential retaliatory actions by Israel contribute to the fact that the current price decline is rather corrective.Resistance levels: 91.95, 93.79, 96.22.Support levels: 89.10, 87.60, ...
EUR/USD: American business did not meet analysts' expectationsIn the current trading session, the EUR/USD pair is showing growth, moving to the level of 1.0700 and updating the highs since April 12 thanks to the released macroeconomic statistics.The values of the indices of business activity in the manufacturing sector in France and Germany for April showed 44.9 and 42.2 points, having stabilized relative to the previous month. In the service sector in France, the index increased from 47.7 to 50.5 points, and in Germany — from 50.1 to 53.3 points. The entire region showed a decrease in manufacturing activity from 46.1 to 45.6 points, while in the services sector the index rose from 51.5 to 52.9 points, which contributed to the growth of the composite index from 50.3 to 51.4 points. Today will bring a speech by the President of the German Federal Bank, Joachim Nagel, in which the forecasts of economic development and inflation are expected to be clarified.Resistance levels: 1.0730, 1.0800.Support levels: 1.0670, 1.0600.NZD/USD: currency pair shows a short-term uptrendThe NZD/USD pair is seeing a slight upward momentum, aiming to exceed the recent peaks of mid-April: the exchange rate is approaching 0.5950, reflecting an increase when traders analyze the latest New Zealand trade data. March reports showed an increase in exports from 5.79 billion to 6.5 billion dollars and a decrease in imports from 6.1 billion to 5.91 billion, reducing the trade deficit from 12.06 billion to 9.87 billion dollars, and allowing the trade balance to reach a surplus of 0.588 billion on a monthly basis.At the same time, the US currency came under pressure after the publication of business activity indices for April: the S&P Global manufacturing index fell from 51.9 to 49.9 points, which is worse than expectations for growth to 52.0, and the services index fell from 51.7 to 50.9 points, against the forecast of 52.0 points.Resistance levels: 0.5950, 0.5975, 0.6000, 0.6030.Support levels: 0.5920, 0.5885, 0.5858, 0.5830.Analysis for GoldThe price of gold showed an uptrend, reaching the level of 2325.0, but now it is experiencing a correction, indicating a decline in the activity of traders focusing on short-term operations.Recent statistics from the United States, presented this week, may delay the start of the interest rate cut cycle until the fall, given that the main indicators for the Federal Reserve remain the real estate and labor market sectors. The March report showed a decrease in the number of building permits to 1.467 million, which is the lowest level since last fall and indicates the untimely reduction of interest rates in the near future. According to the CME FedWatch Tool, the probability of monetary policy easing at the Fed meeting on May 1 is only 5.2%, and at the meetings on June 12 and July 31 — 14.8% and 37.9%, respectively. In this situation, investors who expected to profit from the strengthening of gold came to the conclusion that at the moment a correction is more likely than a further strengthening of prices.Resistance levels: 2350.0, 2410.0.Support levels: 2290.0, 2220.0.Oil market analysisIn the Asian trading session, the prices of WTI Crude Oil demonstrate stability, holding near the level of 83.30 dollars per barrel. This is happening against the background of the publication of April data on business activity in key sectors of the US economy, which turned out to be below analysts' expectations: the index in the manufacturing sector from S&P Global fell to 49.9 points, and in services fell to 50.9 points.It is expected that later today, at 14:30 GMT, new data on orders for durable goods in the United States for March will be announced, which may affect investment sentiment. It is predicted that the indicator for capital goods will decrease to 0.3%, while the total volume of orders excluding the defense sector, on the contrary, will increase to 2.5%. In addition, at 16:30, data from the US Energy Information Administration on oil reserves for the past week will be published, which are tentatively estimated to decrease by 1.7 million barrels.Attention should also be paid to the recent report of the US Commodity Futures Trading Commission, which showed a decrease in net speculative positions on WTI oil to 290.5 thousand. The reporting data indicate the restructuring of investors' portfolios, which may signal the anticipation of changes in the market. Thus, the balance of positions among producers and traders showed an active movement both to buy and to sell, which foreshadows possible fluctuations in oil prices in the near future.Resistance levels: 84.00, 84.75, 85.50, 86.00.Support levels: 83.00, 82.00, 81.00, ...
EUR/GBP: the interest rate of the European Central Bank remained at 4.50%The euro is at low levels compared to most major currencies, with the exception of the US dollar, while the EUR/GBP pair shows a corrective movement in morning trading, settling at 0.8541.At yesterday's meeting of the European Central Bank (ECB), officials, as expected, left the main monetary rates unchanged (the main rate is 4.50%, the marginal rate is 4.75%, the deposit rate is 4.00%) and expressed readiness to reduce them if inflationary pressure decreases. Regulators confirmed that the current slowdown in consumer price growth is in line with medium-term expectations, due to lower prices for food and household goods, but did not specify the timing of a possible change in interest rates. It also announced plans to complete the reinvestment program for emergency asset purchases due to COVID-19 by the end of the year and significantly reduce the asset purchase program. The reduction of the emergency procurement program is taking place at a rate of 7.5 billion euros per month, which will allow it to be completed by the end of November or December.UK economic growth remains weak: in February, GDP growth was, as expected, only 0.1%, which is lower than the previous 0.3%, and this led to a decrease in annual growth to -0.2%. Among the main factors of such dynamics are industrial production, which increased by 1.1%, improving the annual rate to 1.4%, and the construction sector, where a decrease of 1.9% on a monthly basis and 2.0% year-on-year was recorded.Resistance levels: 0.8560, 0.8600.Support levels: 0.8530, 0.8480.USD/TRY: Investors tend to take profits after a week of growthThe USD/TRY currency pair shows ambiguous trends, holding near the level of 32.3165. Traders are refraining from opening new positions on Friday due to the expectation of a limited amount of macroeconomic data from the United States, as well as due to the profit-taking mood after moderate growth during the week. Earlier, the US dollar was helped by inflation data, which increased investors' doubts about the imminent reduction of the US Federal Reserve interest rate by 25 basis points in June.The Turkish lira continues to be under pressure due to economic difficulties in the country. Despite the efforts of monetary authorities and a significant increase in rates by the Central Bank of Turkey, annual inflation accelerated from 67.07% in February to 68.50% in March. At the same time, independent analysts from the Inflation Research Group (ENAG) record an annual price increase of more than 120%. Additionally, on April 9, the Turkish Ministry of Commerce imposed restrictions on the export of 54 categories of goods to Israel, including cement, glass, iron, aluminum and steel, which puts additional pressure on the already strained construction sector. These sanctions, in effect until the end of hostilities and the creation of conditions for free humanitarian aid to Gaza, are likely to raise prices for both Israeli and Turkish consumers.Resistance levels: 32.4500, 32.6000, 32.7500, 32.9000.Support levels: 32.3000, 32.1500, 32.0000, 31.8306.NZD/USD: the US currency has reached a new recordThe NZD/USD currency pair is experiencing a correction near the 0.5995 level, as the New Zealand currency is facing difficulties in trying to regain its position against the background of disappointing macroeconomic statistics.The March report showed that spending via e-cards in New Zealand decreased by 0.7%, which in absolute terms is a decrease of NZ$ 45 million compared to February. Compared to March of the previous year, 2023, the total amount of expenses decreased by 3.0%. This decrease was recorded in almost all key sectors of the economy: of the seven main sectors, only wholesale trade, with the exception of services, showed an increase of 2.1%. The biggest deterioration was seen in the sectors related to sales of clothing and motor vehicles, each of which showed a 2.2% drop. There was also a decrease in the fuel sectors by 1.4%, durable goods by 0.3% and consumables by 0.2%.These data indicate continued pressure on the New Zealand economy, which negatively affects the national currency and contributes to volatility in the foreign exchange market. The lack of significant improvement in economic indicators may continue to put pressure on the New Zealand dollar in the near term.Resistance levels: 0.6030, 0.6110.Support levels: 0.5970, 0.5870.Crude Oil market analysisPrices for North American WTI Crude Oil have stabilized at 85.09 in a sideways trend driven by geopolitical tensions in the Middle East and seasonal growth in global fuel demand.The situation in the Middle East remains tense with expectations of possible Iranian retaliatory attacks on Israeli infrastructure, which has led to warnings for citizens of some countries to visit the region. At the same time, the Organization of Petroleum Exporting Countries (OPEC) in its latest monthly report predicted that global oil demand will increase to 2.25 million barrels per day in 2024, and decrease to 1.85 million barrels per day in 2025. A seasonal increase in fuel consumption is also expected in the second quarter: demand for aviation kerosene will grow by 600 thousand barrels per day, for gasoline — by 400 thousand, and for diesel fuel — by 200 thousand barrels per day.Resistance levels: 86.30, 90.00.Support levels: 84.00, ...
NZD/USD: The Reserve Bank of New Zealand's interest rate remained at 5.50%The NZD/USD currency pair continues to show moderate growth, strengthening the bullish trend that began at the beginning of the week: currently, the exchange rate is approaching 0.6075, updating the highs since March 21 against the background of the latest decisions of the Reserve Bank of New Zealand on the key interest rate.As expected, the rate remained at 5.50%. The bank's official statement emphasized the importance of inflationary risks, which implies maintaining high rates for a long period. The bank's authorities also expressed the expectation that economic activity in New Zealand and its main trading partners may decline, in contrast to the stability of the US economy. It is assumed that major global central banks may begin easing monetary policy closer to the middle or end of the year, which will provide more data for analysis and subsequent market reaction.Meanwhile, the NZD/USD pair was pressured by fresh data from New Zealand: the business confidence index from the New Zealand Institute of Economic Research (NZIER) fell by 25.0% in the first quarter after a 2.0% decline in the previous quarter.Resistance levels: 0.6077, 0.6100, 0.6130, 0.6158.Support levels: 0.6045, 0.6030, 0.6000, 0.5975.GBP/USD: British retail increased by 3.5% in March%The GBP/USD currency pair shows minimal changes, being at the level of 1.2675. The day before, the pair actively grew and reached the highest since March 21, which was caused by the lack of significant macroeconomic data.The March report by the British Consortium of Retailers (BRC) showed an increase in retail sales in the UK by 3.2%, which is significantly higher than the expected 1.8% and the previous month with an increase of 1.0%. Easter celebrations contributed to a significant increase in demand for food, but overall sales growth remains moderate due to adverse weather and high inflation, with a noticeable increase in grocery spending by 6.8% and a decrease in non-food items by 1.9% in the first quarter. In the United States, business optimism data from the National Federation of Independent Business (NFIB) also turned out to be disappointing: the index fell from 89.4 to 88.5 points, falling short of the projected 90.2 points.Resistance levels: 1.2700, 1.2734, 1.2771, 1.2810.Support levels: 1.2650, 1.2600, 1.2573, 1.2539.Gold market AnalysisThe price of gold is in the correction phase within the framework of an uptrend, trading at around 2359.0. A new surge of growth is taking place in the market, which is supported by both private and institutional investors.Since the beginning of the year, a number of factors have favored an increase in quotations. The main support for the precious metals market is the current geopolitical tension: in the context of military conflicts in Ukraine and the Middle East, investors prefer investments in protective assets, among which gold acts as a reliable tool for preserving and increasing capital. This is also confirmed by trading volumes: according to the Chicago Mercantile Exchange (CME Group), the average trading volume over the past two sessions reached 306.5 thousand positions, which is significantly higher than 278.0 thousand in early March and 134.0 thousand. at the end of February.Resistance levels: 2375.0, 2450.0.Support levels: 2330.0, 2250.0.Crude Oil market analysisDuring the Asian trading session, prices for WTI Crude Oil are held at around 84.70, as traders refrain from opening new positions ahead of the release of today's US inflation data at 14:30 GMT+2.The price of oil was influenced by the latest forecasts of the US Energy Information Administration (EIA), according to which it is expected that oil production by OPEC+ countries in 2024 will decrease by 930 thousand barrels per day, which is 190 thousand barrels per day more than previous forecasts. By 2025, it is expected to increase production by 750 thousand barrels per day to 36.89 million barrels. Production forecasts for the current year have been adjusted by 470 thousand barrels per day, and for the next year — by 40 thousand barrels. In March, oil prices showed an increase for the third month in a row against the background of geopolitical risks associated with attacks on merchant ships in the Red Sea. In addition, the market was influenced by data from the American Petroleum Institute (API) on the dynamics of commercial oil reserves: in the week to April 5, inventories increased by 3.034 million barrels, while analysts expected an increase of 2.415 million barrels.Resistance levels: 85.50, 86.00, 87.00, 88.00.Support levels: 84.75, 84.00, 83.00, ...
OPEC+ is markedly reducing oil production - in fact, the exporting countries will pump about 1 million barrels less per day. We have written earlier on why this is so.As a result, supply at the market has become lower, so prices have gone up and are approaching $100 per barrel again.What will the U.S. do after the OPEC+ statement?The coming energy crisis and the high inflation it causes are scaring the whole world, but it's the States that are worried the most right now:expensive oil means expensive fuel;it's causing prices of almost all commodities to rise;inflation is going up - the Fed keeps tightening policy;high key interest rates are pushing the U.S. closer to recession;in addition, high fuel prices can cause social discontent.To prevent this, the U.S. is trying to influence the largest oil producers and keep prices down. Otherwise, the Democrats will most likely not win the congressional elections. They are due in a month.The U.S. started to prepare in advance: President Biden flew to Saudi Arabia this summer and persuaded the U.S. to bring down oil prices. But it did not work out very well: OPEC acts in its own way and does not want to listen to Americans. As a result, the failed negotiations with the Saudis have further diminished the credibility of Biden and the Democrats' ability to influence oil, inflation and economic stability in the United States.However, the Biden administration is not giving up; they have a few more options - rather radical ones - on how to lower oil prices.Additional Oil ReleaseThe safest, though least effective, option is to further draw oil from strategic U.S. storage facilities. In response to OPEC+'s decision to cut production, Biden announced that the U.S. would release 10 million barrels of oil, even as storage reserves are depleted.That would be all well and good, but the announcement had little or no effect on oil prices, especially compared to the previous similar decision to release 180 million barrels to the market. No wonder: the volumes are not comparable.In addition, since U.S. storage reserves are running out, there is a risk that they will not be enough for a rainy day: in case of sharp reductions in domestic production (for example, during hurricanes in the Gulf of Mexico) or imports (if OPEC+ countries reduce exports).Reducing military aid to the ArabsDemocrats have drafted a "Tense Partnership" bill in response to OPEC+ and specifically the alliance's leaders, Saudi Arabia and the UAE. They are accused of "a hostile act against the United States" and "siding with Russia in the conflict with Ukraine."As revenge, the U.S. could withdraw its troops from these countries and stop supplying weapons and other military aid to fight neighboring states and terrorists. This includes protecting oil infrastructure from attack.This option also has disadvantages: without U.S. military support in these countries, there could be problems that would inevitably affect the global oil supply. After all, if military actions or terrorist attacks affect the oil fields or storage facilities of Saudi Aramco, oil will cost even more, and such attacks occur quite often.So even if the Saudis and the UAE will not reduce exports in response to the withdrawal of troops and reduction of arms supply, there is a good chance that sooner or later the fighting will make prices go up.In addition, Saudi Arabia has already planned to prepare for a possible conflict with the United States. For example, in the spring the Saudis said they were going to explore ways to move away from the petrodollar - that is, not to use bucks in the black gold trade. In this case, the demand for the dollar could fall dramatically, especially if other oil-exporting countries do the same.NOPEC: Conflict with OPEC+Amid disagreements with OPEC, the U.S. may return to the "oil production and export cartel law," NOPEC, to have more leverage on oil exporters.In this case, U.S. courts will be able to consider antitrust suits against OPEC+ and in general against countries involved in cartel collusion in the oil market. Under the decision of their own courts, the U.S. will be able to impose sanctions, confiscate property of these countries and put pressure on them in other ways. At the same time, the U.S. itself will indicate what is legal and what is not, thus assessing any actions of the countries that regulate oil production and prices.This option also has a disadvantage: sanctions on exporters would also hit the U.S. itself. If oil prices become lower, the U.S. oil industry will also be hard hit: domestic production will decrease and it will have to import more. And since the market is competitive, and the U.S. in this case will be "enemies of OPEC +", they will have to buy oil more expensive.So, even if the U.S. takes a drastic step - provoking a conflict with Saudi Arabia or the UAE, or starting a sanctions war with OPEC+ - all this will have a negative impact on themselves.Can't sanctions be lifted on Venezuela?As we can see, the U.S. has almost no normal options left to influence the oil market. Nevertheless, the U.S. says it is not going to remove sanctions from Venezuela yet, despite the fact that this would help get more oil on the market and lower oil prices. We may see some new rhetoric in this regard, but no change for now.The Iran deal has also been stalled so far: there is no news or movement on it. Although it is possible that disagreements with the Saudis may attract the U.S. to support Iran, because these are the two sides of the Arab conflict.On the one hand, Iranian oil would help to increase supply, but there is a nuance here as well: the reserves in this country are not grandiose, moreover, most of the oil is already exported in circumvention of sanctions.So what to do with Brent and WTI crude oil prices in 2022?If we discard all of the above options, then all we have to do is sit back and watch oil go up in price. The outlook is also bad: even if the world starts a recession and the demand for oil decreases, OPEC+ is already reducing production and adjusting to negative expectations, and also the supply from Russia may decrease if the embargo comes into force.And if that's the case, U.S. inflation will be high. And given the strong labor market, the Fed may raise the rate even more than 1.25% by the end of the year, and it is not certain that it will slow down next year as well. If rates remain high for a long time, the risk of recession in the U.S. is very high, and stocks and cryptocurrencies will have no fuel for growth. As a result, the economy will have a hard time: liquidity is scarce.If the U.S. starts to act sharply, the dollar is at risk: the "oil" countries can give it up to reduce dependence on the United States. But if the U.S. does nothing, tightening Fed policy will keep the dollar very strong - though at the cost of high inflation and recession. 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In 2019, the "sub-sanctioned" Iran began to increase oil supplies in circumvention of sanctions. Mostly tankers went to China and the Mediterranean: Syria and Turkey. And by the beginning of 2022, the fleet for transporting sanctioned Iranian and Venezuelan oil had tripled. It accounted for approximately 400 million barrels per year. And such a "ghost armada" successfully undermines the business of transport companies.Why did Iranian tankers get such a name?Last year, The Mail on Sunday reported: 123 Iranian vessels circumvent sanctions on oil trade. They change their location to GPS and create the appearance that they are anchored at sea, but at this time they are loading/unloading at the port. They also actively forge documents, use flags of different countries, disable identification systems and use front companies. Oil is often loaded onto several vessels and mixed before reaching its destination. This is also the case with "toxic" Russian oil.At the same time, Iran has a whole "underground" financial system for trade bypassing sanctions, writes the WSJ. It includes accounts in foreign banks, intermediary companies outside the country and firms that coordinate prohibited trade. The annual turnover is estimated at tens of billions of dollars.And Iranian banks attract affiliated firms to manage trade under sanctions. They register "daughters" outside the country, become trusted for Iranian traders, and then trade with foreign buyers of Iranian oil in foreign currency through accounts in foreign banks.Will the "Iranian Armada" help Russia?She is already helping her to circumvent sanctions, writes the Daily Mail. The international non-profit organization United Against Nuclear Iran (UANI) accuses the Iranian navy of cooperating with Russian oil companies. Allegedly, Russian oilmen are using "Tehran's black market vessels" to circumvent the export ban. And the US, the EU and the UK are even calling for the formation of a team of "ghostbusters".At least 5 Iranian "ghost armadas" are transporting oil from Russia to China and India, according to UANI. And recently, the WSJ reported that Zamanoil from the UAE was linking Iranian and Russian oil workers. The US Treasury accused her of working with the Russian government and Rosneft on the supply of Iranian oil to Europe.However, at the end of March, Iran denied a "secret offer from Russia" to help it circumvent sanctions in exchange for support in concluding a nuclear deal. And in May, he noted that he could not be a competitor of Russia in the global oil and gas market. The country has its own regular customers, and Iran sells the maximum amount of oil.So officially, Iran does not seem to be planning to use its "army of ghosts" to help for the benefit of Russia, despite the fact that these countries have "converged" before. But then there was no question of an embargo on Russian oil and there was no ban on ship insurance. In the new reality, the actions of the "ghost armada" are quite difficult to ...
The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil ...
Oil is getting more expensive on Friday morning. By 8.25 GMT, the price of a barrel of Brent oil rose to 70 dollars 89 cents, or 1.75%. The price of a barrel of WTI oil rose to 67 dollars 71 cents or 1.22%. According to the results of trading on Thursday, these oil standards rose by 1.2% and 1.4%, respectively. Investors evaluate the results of the last meeting of the countries participating in the OPEC+ agreement. Some market participants expected that the alliance would decide to reduce the volume of oil production. However, OPEC+ retained the current parameters of the deal. This means that the alliance will continue to increase the volume of raw material production by 400,000 b/s every month. At the same time, the participants of the meeting stated that they could make a different decision on the volume of production at any time. Everything will depend on the situation on the oil market and in the global economy. They noted the persistence of uncertainty. It intensified after the appearance of the next coronavirus strain omicron. Investors liked the alliance's statement about the possible holding of an extraordinary meeting, if the situation requires ...