EUR/USD: the market is preparing for the ECB's decision to lower key ratesThe EUR/USD pair shows a multidirectional movement, trading around the 1.0520 mark. Market activity remains low, as traders are waiting for the publication of key data on inflation in the United States, which may set the tone for further dynamics of the instrument.Tomorrow at 15:15 (GMT+2), the European Central Bank (ECB) plans to announce a reduction in three main interest rates — key, margin and deposit — by 25 basis points, bringing them to 3.15%, 3.00% and 3.40%, respectively. These measures are due to a slowdown in growth in major eurozone economies such as Germany and France, where business sentiment continues to remain low. The problems are most acute in the manufacturing and service sectors. However, experts emphasize that the current monetary policy of the ECB has an impact: inflation in the eurozone remains controlled. In November, the consumer price index rose from 2.0% to 2.3% in annual terms, in line with forecasts, and on a monthly basis it decreased by 0.3% after a similar increase a month earlier. The underlying indicator also strengthened to 2.8% year-on-year, despite a decrease in monthly terms. ECB President Christine Lagarde will hold a press conference at 17:15 (GMT+2), where she will announce the results of the meeting and, possibly, share forecasts for the further development of the region's economy. Market participants are waiting for her comments on the strategy of the financial authorities against the background of continuing global uncertainty and prospects for subsequent easing of monetary policy.Resistance levels: 1.0554, 1.0600, 1.0629, 1.0665.Support levels: 1.0500, 1.0450, 1.0400, 1.0350.USD/CHF: November inflation in the United States may become a driver for the pairThe USD/CHF pair continues to adjust, trading near the 0.8836 mark, against the background of the publication of neutral macroeconomic data.The Swiss consumer price index in November decreased by 0.1% month-on-month and rose from 0.6% to 0.7% year-on-year, remaining at minimum levels among the G10 countries. This is significantly below the target range of 0.0–2.0% indicated by the Swiss National Bank. As a result, experts are increasingly confident in the continuation of monetary policy easing: at the December 12 meeting, the interest rate is expected to decrease by 25 basis points to 0.75%. Forecasts suggest that by the end of 2025, the rate may drop to the range of 0.00–0.25%.The US dollar remains stable, trading around the 106.00 mark in USDX, in anticipation of November inflation data, which will be released today at 15:30 (GMT+2). The general consumer price index is expected to grow from 2.6% to 2.7% in annual terms and from 0.2% to 0.3% on a monthly basis. Core inflation, excluding food and energy prices, is likely to remain at 3.3% year-on-year and 0.3% month-on-month. Such data may support further Fed rate cuts of 25 basis points in December, however, the regulator may consider the possibility of a pause in policy easing early next year, given the risk of accelerating inflation under the influence of economic reforms of the administration of President-elect Donald Trump.Resistance levels: 0.8860, 0.9000.Support levels: 0.8800, 0.8680.USD/JPY: the pair maintains positions below the key zone of 157.70–152.00The USD/JPY pair shows sideways dynamics in the area of 151.54, where the yen is trying to strengthen its position against the background of a neutral movement of the US currency and expectations of a tightening policy by the Bank of Japan at the upcoming meeting.After the publication of key macroeconomic indicators, including data on the labor market and inflation, Japan's gross domestic product (GDP) in the third quarter reduced its growth rate from 0.5% to 0.3%, which coincided with analysts' expectations and confirmed the stability of the economy. Judging by the latest comments, the Bank of Japan may raise the interest rate at its meeting on December 19. Additionally, the price index for corporate goods in November remained at 0.3% month-on-month, while the annual rate increased from 3.6% to 3.7%. However, preliminary statistics on orders in mechanical engineering showed a sharp slowdown from 9.3% to 3.0%, reflecting the pressure of geopolitical factors and a decrease in foreign demand. The decision of the Bank of Japan will largely depend on the results of the meeting of the US Federal Reserve System scheduled for December 17-18. If the US regulator leaves the rate unchanged or reduces it by 25 basis points, the probability of raising the Japanese rate by a similar amount will increase significantly.Resistance levels: 152.40, 155.40.Support levels: 150.60, 146.90.Oil market analysisDuring morning trading, WTI Crude Oil demonstrates the strengthening of the "bullish" momentum that began at the beginning of the week. Quotes reached the level of 68.70, trying to overcome it against the background of stabilization of the situation in Syria, which previously could have caused disruptions in the supply of raw materials. At the same time, the projected growth in fuel demand in China next year has a restraining effect on the downward trend. Meanwhile, representatives of Saudi Aramco, the largest oil exporter, reported a decrease in supply prices for Asian countries in January 2025 to the lowest values since the beginning of 2021, due to weakening demand from China.Today at 15:30 (GMT+2), the market expects the publication of inflation data in the United States. Forecasts suggest an increase in the consumer price index in annual terms from 2.6% to 2.7% and on a monthly basis from 0.2% to 0.3%. The basic indicator, excluding volatile categories of goods, may remain at the level of 3.3% year—on-year and 0.3% month-on-month. Analysts believe that these data are unlikely to change current expectations for a 25 basis point interest rate cut by the US Federal Reserve at its December 17-18 meeting. According to the FedWatch Tool, the probability of such an outcome is estimated at 90.0%.Additionally, the attention of market participants is focused on data from the American Petroleum Institute (API), which recorded an increase in oil reserves for the week from 1,232 million to 0.499 million barrels, with a forecast decrease of 1.3 million barrels. Today at 17:30 (GMT+2), the Energy Information Administration (EIA) will publish its report: reserves are projected to decrease by 1.3 million barrels after falling by 5.073 million barrels earlier. The EIA also adjusted production forecasts: for 2023, the value was increased by 10 thousand barrels per day to 13.24 million, and for 2025, it was reduced by the same amount to 13.52 million barrels per day. The demand for oil, according to the ministry, this year decreased by 100 thousand barrels per day to 103.03 million, and the forecast for 2025 was reduced by 30 thousand barrels per day to 104.32 million.Resistance levels: 69.06, 69.47, 70.00, 71.00.Support levels: 68.30, 67.53, 67.00, ...
EUR/USD: the regulator in the USA adjusted the rate by 25 bp.The EUR/USD pair continues to adjust, trading around 1.0375 amid the strengthening of the US dollar and growing expectations of further monetary easing by the European Central Bank (ECB) after the published data on a decrease in inflation.In November, the consumer price index in the eurozone fell from 0.3% to -0.3% on a monthly basis, and increased from 2.0% to 2.2% on an annual basis, which turned out to be lower than forecasts of 2.3%. The basic indicator excluding energy and food products fell from 0.2% to -0.6% on a monthly basis and remained at 2.7% on an annual basis. These results strengthen the case for continued rate cuts, which puts pressure on the euro.The US dollar strengthened to 107.80 on the USDX index after the decision of the US Federal Reserve to cut the rate by 25 basis points to a range of 4.25–4.50%. In addition, the regulator presented revised forecasts: inflation in 2024 is expected to reach 2.4% against 2.3% earlier, in 2025 — 2.5% instead of 2.1%. The GDP growth forecast has been improved to 2.5% in 2024 and 2.0% in 2025. The average rate by the end of 2025 is expected to be 4.4%, and in 2026 it will decrease to 3.9%, which is higher than previous estimates. In his statement, the head of the Fed noted that the US economy remains stable, the labor market is cooling, and inflation has slowed significantly over the past two years, although it exceeds target levels. He also stressed that the risks to inflation are generally balanced, but the current dynamics may include temporary factors.Resistance levels: 1.0410, 1.0580.Support levels: 1.0330, 1.0180.GBP/USD: UK has joined the CPTPP Economic AllianceDuring morning trading, the GBP/USD pair is held at 1.2590, partially recovering the losses incurred the previous day. The increase in quotations is due to technical factors, but traders are taking a wait-and-see position before the announcement of the results of the Bank of England meeting scheduled for 14:00 (GMT+2). According to analysts, the regulator's management will probably decide to leave the key rate at 4.75%, with eight of the nine board members supporting this decision.Wednesday brought disappointment in the form of inflation data: the consumer price index rose from 2.3% to 2.6% in November, and the base indicator increased from 3.3% to 3.5%, which slightly exceeded forecasts. Such dynamics signal the possibility of further revision of monetary policy by the Bank of England if inflationary pressure persists or increases in the coming months.On December 15, the United Kingdom completed the process of joining the Trans-Pacific Partnership, becoming a full participant in it. Within the framework of the alliance, the country waived import duties on palm oil from Malaysia, and also facilitated a number of procedures for trade with other members of the agreement. This step underlines London's desire to strengthen international economic ties and develop partnerships with 11 other member states of the association.Resistance levels: 1.2600, 1.2650, 1.2700, 1.2730.Support levels: 1.2550, 1.2500, 1.2450, 1.2400.Silver market analysisAfter a long period of consolidation above the 30.00 mark, the XAG/USD pair fell below this level, which is due to the strengthening of the US currency.The decline in silver prices is taking place against the background of the "dovish" rhetoric of the US Federal Reserve System. Each step to lower the interest rate, accompanied by statements by Fed Chairman Jerome Powell, puts pressure on the metals market. Powell stressed that the American economy is showing stability, and the forecast for GDP growth at the end of 2024 has been raised to 2.5% against the previously expected 2.0%. Moreover, the regulator is considering the possibility of a temporary pause in the cycle of monetary policy easing in order to strengthen control over inflation and bring it to a level below 2.0%. Such steps reduce the attractiveness of precious metals as a protective asset in conditions of stabilization of the economic situation.On December 18, the volume of silver futures trading decreased to 50.0 thousand, which is significantly lower than the maximum values of December 11 and 12 — 126.0–127.0 thousand. A similar reduction is observed in the option position, which yesterday amounted to 8,145 thousand, down from a peak of 22,706 thousand last week. This may indicate that market participants are not confident that silver prices will continue to rise and prefer to close positions, waiting for clearer signals for further action.Resistance levels: 30.00, 31.40.Support levels: 29.00, 27.40.Crude Oil market analysisBrent Crude Oil prices are showing a sideways trend, remaining slightly above the level of 72.00. The instrument was under pressure due to the growth of the US currency, which reached an annual maximum after the US Federal Reserve lowered the interest rate by 25 basis points and improved forecasts for economic growth by the end of the year.Investors drew attention to the agreement concluded between the Russian company Rosneft and the Indian giant Reliance Industries Ltd. The document provides for the transportation of 500.0 thousand barrels of oil daily to India for ten years, starting in 2025, which makes this deal the largest for the region. The implementation of the project will cover a significant share of Indian demand for hydrocarbons, and processed raw materials will probably be supplied to the countries of the European Union, filling the market deficit caused by sanctions against the Russian energy sector related to the conflict in Ukraine.Support levels: 71.23, 67.61.Resistance levels: 75.38, ...
USD/CHF: breakout of 0.8920 will open the way to July peaksLast week, the USD/CHF pair tested the support level of 0.8755 during the correction, after which it began a reversal and is trying to develop an upward momentum.The US currency was supported by positive macroeconomic data: the number of people employed in the non-agricultural sector increased from 36.0 thousand to 227.0 thousand in November, which significantly exceeded analysts' forecasts of 202.0 thousand. The unemployment rate was expected to remain at 4.2%, and the average hourly wage increased by 0.4% on a monthly basis, which is better than expectations of 0.3%. These indicators strengthen the likelihood of a more cautious approach by the US Federal Reserve to further monetary policy easing.The Swiss franc weakened its position after the publication of inflation data for November. The consumer price index for the month decreased by 0.1%, and in annual terms it was fixed at 0.7%, which turned out to be lower than the projected 0.8%. As a result, the Swiss National Bank may continue to ease monetary policy. The head of the regulator, Martin Schlegel, previously announced his readiness to consider the possibility of reducing the interest rate to negative values in order to reduce the attractiveness of the franc as a safe haven asset.Resistance levels: 0.8920, 0.9050.Support levels: 0.8755, 0.8625.USD/JPY: Japan's GDP data surpassed forecastsThe USD/JPY pair shows multidirectional fluctuations, remaining around the 149.85 mark. The main attention of market participants is focused on macroeconomic data from Japan, which, despite its positive nature, does not have a significant impact on the dynamics of the asset.In the third quarter, the Japanese economy showed GDP growth from 0.2% to 0.3% in quarterly terms and from 0.9% to 1.2% annually. However, the GDP deflator slowed from 2.6% to 2.4%, indicating a decrease in inflation expectations, which may complicate the tasks of the Bank of Japan to tighten monetary policy. Business activity indicators also turned out to be higher than expected: the Eco Watchers current situation index rose from 47.5 points to 49.4 points, and the forecast for the development of events reached a similar value, exceeding the previous result of 48.3 points.The data released on Friday turned out to be mixed. The index of leading indicators decreased from 108.9 to 108.6 points, while the index of matching indicators strengthened to 116.5 points. Household spending fell by 1.3% in October, which is better than the projected decline of 2.6%. At the same time, wage growth accelerated to 2.6%, raising expectations about inflation. Against this background, Toyoaki Nakamura, a member of the Board of the Bank of Japan, stressed the need to take into account the dynamics of salaries and business sentiment of Tankan when making decisions on possible changes in interest rates. Market participants took these statements as a "hawkish" signal, which was reflected in the growth in the yield of 10-year bonds, which increased to 1.065%.Resistance levels: 150.00, 150.50, 151.50, 152.22.Support levels: 149.35, 148.64, 148.00, 147.00.Gold market analysisGold shows a smooth decline, falling back to the level of 2640.00 and testing it for a breakdown downwards. Despite the limited number of factors that can radically change the situation in the market, investor activity remains high, which is due to the analysis of Friday's data on the American labor market.Recall that in November, the US economy created 227.0 thousand new jobs outside the agricultural sector, which significantly exceeds the revised October figures of 36.0 thousand (previously 12.0 thousand) and analysts' forecasts of 200.0 thousand. The unemployment rate increased from 4.1% to 4.2%, in line with expectations, while the average hourly wage remained at 4.0% year-on-year, higher than the forecast of 3.9%, and amounted to 0.4% month-on-month with expectations of 0.3%. Although the data cannot be called unambiguously positive, market participants regarded them as a signal of a possible continuation of the easing of the Federal Reserve's policy at the December meeting.According to the latest data from the CME Group FedWatch Tool, the probability of a Fed rate cut by 25 basis points in December rose to 87.0%, whereas a week ago it did not exceed 70.0%. An additional confirmation of positive expectations was the growth of the consumer confidence index from the University of Michigan from 71.8 points in November to 74.0 points in December, which turned out to be higher than both the results of the previous month and preliminary forecasts of 73.0 points.Resistance levels: 2655.00, 2670.00, 2685.56, 2700.00.Support levels: 2630.00, 2613.50, 2600.00, 2589.61.Crude Oil market analysisWTI Crude Oil prices are approaching the 67.00 mark, maintaining a downward trend in the global market. This movement is due to the expectations of market participants that OPEC+ will extend the current restrictions on oil production for another three months.The decision to maintain the cuts is related to the cartel's desire to avoid instability in the winter. During this time, the organization's member countries plan to resolve issues related to incomplete fulfillment of obligations, after which the situation with global demand, especially from China, will become clearer. Experts note that the slowdown in China's economic growth this year has had a negative impact on energy consumption. In addition, the country's gradual transition to electric cars continues to reduce demand for traditional hydrocarbons.This week, the attention of market participants will be focused on data on oil reserves. According to forecasts, the report of the American Petroleum Institute (API) will indicate an increase in reserves by 1,232 million barrels, as it was a week earlier, and statistics from the Energy Information Administration (EIA) will show an increase of 1,400 million barrels, which will be a noticeable contrast after a decrease of 5,073 million barrels in the previous period.Resistance levels: 68.10, 71.80.Support levels: 66.50, ...
EUR/USD: investors' attention is focused on the crisis in FranceThe EUR/USD pair is correcting near the 1.0509 mark, demonstrating a decrease in interest in the US dollar, but at the same time not receiving sufficient support from the macroeconomic data of the eurozone.According to forecasts, the November index of business activity in the Spanish services sector will decrease from 54.9 points to 53.6 points, in Italy from 52.4 points to 51.1 points, in France from 48.1 points to 44.8 points, and in Germany from 51.6 points to 49.4 points. These data indicate a slowdown in economic activity even against the background of interest rate cuts by the European Central Bank (ECB) aimed at supporting businesses and reducing debt pressure. The combined indicator of business activity in the eurozone is likely to decrease from 51.6 points to 49.2 points, which will take it out of the positive zone for the first time since the beginning of the year.Investors' attention is also focused on the political situation in France, where Prime Minister Michel Barnier, bypassing parliament, is promoting a bill providing for an increase in the tax burden on businesses by $ 62.8 billion and a reduction in government spending by $ 42.0 billion in order to reduce the budget deficit of 6.1% of GDP. This step caused sharp dissatisfaction with the opposition, which initiated the procedure for passing a vote of no confidence in the government. The escalating crisis risks exacerbating the already difficult situation of the national economy, which continues to struggle with high inflationary pressures.Support levels: 1.0460, 1.0330.Resistance levels: 1.0540, 1.0680.NZD/USD: construction statistics brought down NZD positionsThe NZD/USD pair started the week with negative dynamics, holding around 0.5860 after the publication of fresh macroeconomic statistics from New Zealand.According to the report, in October, the number of construction permits issued fell by 5.2%, which is significantly worse than the forecast of 1.7%. The previous value was also revised downwards from 2.6% to 2.4%. Such data reinforce concerns about a slowdown in economic growth and a possible negative impact on gross domestic product (GDP). In the current situation, experts predict that the Reserve Bank of New Zealand (RBNZ) may consider options for lowering interest rates to stimulate business activity, which puts pressure on the national currency. However, there are also positive signals: trading conditions improved from 2.1% to 2.4% in the third quarter, which turned out to be higher than analysts' expectations at 1.8%. This factor can provide short-term support to the New Zealand dollar, deterring it from a deeper decline until additional catalysts appear on the market.Resistance levels: 0.6035, 0.6120, 0.6220.Support levels: 0.5860, 0.5800, 0.5600.Silver market analysisAfter a long period of decline, the XAG/USD pair is showing recovery and is holding at 31.06 during trading in the Asian session. However, there is no confident upward momentum yet.One of the main limiting factors remains the decline in interest in silver, both in the form of contracts and in the form of physical metal, which is in demand in industry. According to the Silver Institute, in 2024, the volume of investments in this asset may decrease by 15.0%, reaching only $ 208.0 million. The decline is particularly noticeable in the US market, where sales of investment bars and coins fell by 40.0%, which is the lowest since 2019. The reason for this trend may be both a reduction in the financial capabilities of market participants and their preference for more active instruments such as gold or oil. Nevertheless, certain positive trends persist. In particular, industrial demand for silver will increase by 7.0% this year, and investments in exchange-traded funds (ETFs) backed by this metal will grow by 8.0%. This growth will be the first improvement since 2020, indicating a recovery in interest from long-term investors and the industrial sector.Resistance levels: 31.40, 33.00.Support levels: 30.50, 28.70.Oil market analysisWTI Crude Oil prices continue to move towards the important 70.00 mark, supporting the optimistic mood in the global commodity markets. The weakening of the US dollar has become a key driver of the current positive dynamics, which helps attract investors to energy purchases.The focus of market participants is on the meeting of OPEC+ ministers scheduled for Thursday at 12:00 (GMT+2). It is expected that the cartel members will again be unable to come to an agreement on increasing oil production, postponing this decision for the third time in a row for a maximum period of three months. The previous adjustment of production volumes, scheduled for December and amounting to 180.0 thousand barrels per day, was also postponed from October. This uncertainty is related to the variability in the forecast of global demand for hydrocarbons, especially against the background of slowing economic growth in key consumer countries. Special attention is paid to China, where economic difficulties have been observed since the beginning of autumn, but their mitigation has been accompanied by the country's active transition to electric transport, which reduces oil consumption. This process, although gradual, is already having an impact on the market. According to Reuters analysts, Chinese oil companies predict a further decline in demand for raw materials, as electric vehicles continue to displace gasoline-powered vehicles.Resistance levels: 71.20, 74.10.Support levels: 68.60, ...
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 ...