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Oil falls 2% on expectations that U.S. Gulf supply disruption will ease

“Don’t worry about failure; you only have to be right once.” — Drew Houston

 

 

HEADLINES

 

 

  • Stronger dollar set for weekly loss as traders adjust rate hike bets
  • Gold gains, set for weekly rise as U.S. yields drop
  • Oil falls 2% on expectations that U.S. Gulf supply disruption will ease
  • Global stocks rise, U.S. yields fall as inflation slows
  • Global stocks rise, U.S. yields fall as inflation slows
  • GBP/USD set to head back to the 1.20 zone – Scotiabank
  • EURUSD Short Term: Downside favored

 

 

Stronger dollar set for weekly loss as traders adjust rate hike bets

 

 

he dollar rallied on Friday but was set for a weekly drop as traders weighed improving U.S. inflation data against comments from Federal Reserve officials who cautioned the battle against rising prices is far from over.

U.S. import prices declined for the first time in seven months in July on lower costs for both fuel and non-fuel products, data showed on Friday, in the third report this week to hint inflation may have peaked.

The dollar dropped more than 1% after Wednesday's consumer price index data, but has reversed some of those losses and is on track for a 0.8% decline for the week.

 

 

 

COMMODITIES

 

 

Gold gains, set for weekly rise as U.S. yields drop

 

 

Gold prices drifted higher on Friday helped by a drop in U.S. Treasury yields and setting the metal on path for a fourth straight week of gains, as investors took stock of the recent inflation data out of the United States.

Spot gold rose 0.5% to $1,798.86 per ounce by 1800 GMT and was headed for a more than 1% weekly rise. U.S. gold futures also settled up 0.5% at $1,815.5.

Gold tends to do well in a low-interest environment as it yields no interest.

Meanwhile, high domestic prices restrained physical gold demand in India this week, while uncertainty surrounding Taiwan-related developments prompted bullion importers in China to hold off on big purchases.

 

 

 

ENERGY

 

 

Oil falls 2% on expectations that U.S. Gulf supply disruption will ease

 

 

Oil prices plunged around 2% on Friday, on expectations that supply disruptions in the U.S. Gulf of Mexico would be short-term, while recession fears clouded the demand outlook.

Futures, however, were still on track for a weekly gain.

Brent crude futures fell $1.47, or 1.5%, to $98.13 a barrel by 11:10 a.m. EDT (1510 GMT), while U.S. West Texas Intermediate (WTI) crude fell $2.08, or 2.2%, to $92.26 a barrel. Both contracts gained more than 2% on Thursday.

 

 

STOCKS

 

 

Wall Street set for weekly gains on signs of cooling inflation

 

 

Wall Street's main indexes rose on Friday, setting the S&P 500 and the Nasdaq for a fourth straight week of gains on increasing evidence that inflation may have peaked.

The S&P 500 (.SPX) is up 16.8% from its mid-June low, with the latest boost coming from a slower-than-expected rise in consumer prices and a surprise drop in producer prices in July.

The benchmark index crossed a closely watched technical level of 4,231 points, indicating it has recovered 50% of its bear market loss. It was headed for fourth straight week of gains, its best performance since November 2021.

 

 

Global stocks rise, U.S. yields fall as inflation slows

 

 

Global equity markets rose while U.S. Treasury yields fell on Friday as investors tempered their expectations of the scale of the Federal Reserve's interest rate raising cycle as falling oil prices helped to cool inflation.

Market sentiment has been buoyed by U.S. Labor Department data this week showing a slowdown in consumer and producer prices in July following a series of interest rate hikes by the Fed.

U.S. Treasury yields were down as traders weighed a likely moderation of the Fed's monetary policy stance. Benchmark 10-year note yields dipped to 2.8639%, after reaching 2.902% on Thursday, the highest since July 22.

 

 

ANALYSIS

 

 

GBP/USD set to head back to the 1.20 zone – Scotiabank 

 

 

“The energy crunch and cost-of-living crisis suggest significant economic headwinds lie ahead for the UK economy and that will restrain the GBP’s ability to advance against a softer USD.”

“The top of the range this week coincided with a test of key resistance at 1.2275 and failure here suggests cable risks heading back to the 1.20 zone.”

“We spot key support at 1.2080 in the short run.”

 

 

CHART

 

 

EURUSD Short Term: Downside favored

 

 

Technical View: Short position below 1.033. Target 1.0275. Conversely, break above 1.033, to open 1.0365.

Comments: The pair remains under pressure. Further weakness favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/europe/japans-yen-bears-brunt-market-rethink-fed-2022-08-12/
https://www.reuters.com/markets/europe/gold-set-fourth-weekly-gain-us-dollar-under-pressure-2022-08-12/
https://www.reuters.com/business/energy/oil-prices-track-weekly-gain-recession-fears-ease-2022-08-12/
https://www.reuters.com/markets/europe/futures-up-easing-price-pressures-set-wall-st-weekly-gains-2022-08-12/
https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-08-12/
https://www.fxstreet.com/news/gbp-usd-set-to-head-back-to-the-120-zone-scotiabank-202208121324

 

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