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Oil rises from seven-month low as Russia threatens export halt

 

“Every time we launch a feature, people yell at us.” — Angelo Sotira

 

 

 HEADLINES

 

 

  • Sterling struggles against strong dollar, energy plan has limited effect
  • Gold dips as U.S. dollar, yields rise after Powell comments
  • Oil rises from seven-month low as Russia threatens export halt
  • Dow gains 100 points as Wall Street looks past Powell’s comments signaling future rate hikes
  • Bond yields tick up slightly after ECB delivers large interest rate hike
  • EUR/USD: Further declines likely in the near-term – Wells Fargo
  • EURUSD Short Term: Upside favored

 

 

Sterling struggles against strong dollar, energy plan has limited effect

 

 

The pound failed to hold onto small gains from morning trading on Thursday as hawkish remarks from Federal Reserve Chair Jerome Powell outweighed British policies aimed at reducing surging energy costs, and left sterling near its 37-year low hit a day earlier.

Sterling was last at $1.1486, 0.42% lower, having reached as high as $1.1562 as new Prime Minister Liz Truss announced a cap on soaring consumer energy bills for two years on Thursday.

This was still not far above the $1.1407 it hit on Wednesday, however, its lowest since 1985. The British currency has fallen 15% on the dollar this year, weighed down by a combination of slowing economic growth and surging inflation.

 

 

COMMODITIES

 

 

Gold dips as U.S. dollar, yields rise after Powell comments

 

 

Gold prices slipped on Thursday as the dollar and U.S. Treasury yields climbed after comments from Federal Reserve Chair Jerome Powell cemented expectation around a 75-basis-point rate hike at its upcoming policy meeting.

The Fed is “strongly committed” to controlling inflation but there remains hope it can be done without the “very high social costs” involved in prior inflation fights, Powell said.

Spot gold was down 0.4% at $1,711.10 per ounce by 10:02 a.m. EST (1402 GMT), after hitting a more than one-week high earlier in the session.

U.S. gold futures fell 0.4% to $1,721.40.

 

 

ENERGY

 

 

Oil rises from seven-month low as Russia threatens export halt

 

 

Crude prices edged up about 2% on Thursday after dropping to a seven-month low in the prior session after Russia threatened to halt oil and gas exports to some buyers.

That price increase came despite a surprise build in U.S. crude inventories last week, and concerns that China's extension of COVID-19 lockdown measures and rising interest rates around the world would slow economic activity and hit fuel demand.

 

STOCKS

 

 

Dow gains 100 points as Wall Street looks past Powell’s comments signaling future rate hikes

 

 

Stocks rose Thursday after moving between gains and losses as Wall Street weighed Federal Reserve Chair Jerome Powell’s comments on the central bank continuing to fight inflation.

The Dow Jones Industrial Average jumped 136 points, or 0.43%. The S&P 500 rose 0.41%, and the Nasdaq Composite advanced 0.14%.

Earlier, socks slid during a Q&A session from Powell at the Cato Institute where he reiterated that the central bank will do what it takes to fight inflation. He also signaled that a pause in rate hikes or a pivot to cutting interest rates is not coming soon.

 

 

Bond yields tick up slightly after ECB delivers large interest rate hike

 

 

Bond yields rose slightly on Thursday from the previous session after the European Central Bank hiked interest rates in an effort to tame high inflation.

The yield on the benchmark 10-year Treasury note was up 2 basis points at 3.288% at around 2:00 p.m. ET. The yield on the 30-year Treasury bond was up nearly 3 basis points at 3.435%.

The yield on the 2-year Treasury traded nearly 4 basis points higher at 3.485%. The short-term note rose to 3.55% last week, reaching its highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

 

EUR/USD: Further declines likely in the near-term – Wells Fargo 

 

 

“Following today's record rate increase, we now forecast the European Central Bank will raise its Deposit Rate another 50 basis points in late October and also 50 basis points in December, lifting the Deposit rate to 1.75% by the end of this year. We expect a final 25 basis point rate increase to 2.00% in early 2023.”

“From a currency perspective, we still expect some further declines in the euro in the near-term, given the Fed remains firmly in tightening mode for now and with the Eurozone economic outlook less than stellar. We do expect some rebound in the euro in 2023 as a steady ECB monetary policy outlook sees the euro outperform against the U.S. dollar, with the latter likely weighed down by the anticipation and eventual implementation of Federal Reserve monetary easing by late 2023.”

 

 

CHART

 

 

EURUSD Short Term: Upside favored

 

 

Technical View: Long position above 0.9955. Target 1.001. Conversely, break below 0.9955, to open 0.9922.

Comments: The pair breaks above the resistance.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar


Footnotes

https://www.reuters.com/markets/us/pound-slides-ahead-british-pm-trusss-energy-plan-2022-09-08/
https://www.reuters.com/article/global-precious/precious-gold-dips-after-powell-reiterates-vow-to-tame-inflation-idUSL1N30F1I9
https://www.reuters.com/business/energy/oil-prices-rise-spectre-europe-energy-rationing-2022-09-08/
https://www.cnbc.com/2022/09/07/stock-market-news-open-to-close.html
https://www.cnbc.com/2022/09/08/us-bonds-us-treasury-yields-after-wall-streets-best-day-in-month.html
https://www.fxstreet.com/news/eur-usd-further-declines-likely-in-the-near-term-wells-fargo-202209081543
 

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