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Oil settles up more than 4% on prospect of OPEC+ supply cut

“Why do we fall sir? So that we can learn to pick ourselves up.” – Alfred

 

 

 HEADLINES

 

 

  • Dollar eases off of 20-year high as euro boosted by rates view
  • Gold recovers from one-month low as dollar rally stalls
  • Oil settles up more than 4% on prospect of OPEC+ supply cut
  • Wall Street retreats as rate hike concerns persist
  • 2-year yield hits highest level since 2007 as traders weigh potential for more rate hikes
  • EUR/USD to fall to 0.9600 or lower – Wells Fargo
  • EURJPY Near Term: Upside favored

 

 

Dollar eases off of 20-year high as euro boosted by rates view

 

The dollar touched a fresh 20-year high on Monday, lifted by hawkish comments by Federal Reserve Chair Jerome Powell, but was kept in check as the euro was boosted by growing expectations for European Central Bank (ECB) rate hikes.

The dollar index , which measures the currency's value against a basket of peers, hit 109.48 early in the session, a level not seen since September 2002.

The greenback extended gains from Friday, when Powell told the Jackson Hole central banking conference in Wyoming the Fed would raise rates as high as needed to restrict growth, and keep them there "for some time" to lower inflation running at more than three times the Fed's 2% goal.

 

 

COMMODITIES

 

 

Gold recovers from one-month low as dollar rally stalls

 

Gold prices reversed course to trade higher on Monday as a dollar rally lost steam, having pushed bullion to one-month lows earlier in the session after the U.S. Federal Reserve signalled higher interest rates.

Spot gold was steady at $1,737.57 per ounce by 2:15 p.m. ET (1815 GMT). Prices touched their lowest since July 27 at $1,719.56 earlier in the session.

U.S. gold futures settled flat at $1,749.7.

 

 

ENERGY

 

 

Oil settles up more than 4% on prospect of OPEC+ supply cut

 

Oil prices settled up more than 4% on Monday, extending last week's gain, as potential OPEC+ output cuts and conflict in Libya helped to offset a strong U.S. dollar and a dire outlook for U.S. growth.

Saudi Arabia, top producer in the Organization of the Petroleum Exporting Countries (OPEC), last week raised the possibility of production cuts, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West.

OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on Sept. 5.

Brent crude settled up $4.10, or 4.1%, at $105.09 a barrel, having risen by 4.4% last week. U.S. West Texas Intermediate (WTI) crude gained $3.95, or 4.2%, to$ 97.01, after rallying 2.5% last week.

 

 

STOCKS

 

 

Wall Street retreats as rate hike concerns persist

 

U.S. stocks closed lower on Monday, adding to last week's sharp losses on nagging concerns about the Federal Reserve's determination to aggressively hike interest rates to fight inflation even as the economy slows.

Fed Chair Jerome Powell said on Friday the U.S. economy would need tight monetary policy "for some time" before inflation is under control, dashing hopes the Fed might pivot to more subdued rate hikes after recent data suggested price pressures were peaking.

The S&P 500 recovered from session lows that put it down 1% at the lowest in a month, but the benchmark index still notched its biggest two-day percentage decline in 2-1/2 months.

 

 

2-year yield hits highest level since 2007 as traders weigh potential for more rate hikes

 

U.S. Treasury yields rose Monday as investors digested comments from Federal Reserve Chair Jerome Powell.

The yield on the short-term 2-year Treasury note was about 4 basis points higher, trading at about 3.429%. Earlier in the day, the rate hit its highest level since 2007.

The yield on the benchmark 10-year Treasury note rose nearly 8 basis points to 3.114%, while the yield on the 30-year Treasury bond gained more than 4 basis points to 3.247%. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

 

EUR/USD to fall to 0.9600 or lower – Wells Fargo 

 

“We still expect further downside in the euro.”

“Given energy supply disruptions, earlier Eurozone recession and a relatively limited monetary tightening cycle from the European Central Bank (ECB), we expect the EUR/USD exchange rate to fall to 0.9600 or lower.”

 

 

CHART

 

 

EURJPY Near Term: Upside favored

 

Technical View: Long position above 138.11. Target 139.4. Conversely, break below 138.11, to open 137.48.

Comments: The pair is expected to resume advance after correction.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar


Footnotes
https://www.reuters.com/markets/europe/dollar-gains-investors-brace-higher-rates-2022-08-29/
https://www.reuters.com/article/global-precious/precious-gold-recovers-from-one-month-low-as-dollar-rally-stalls-idUSL4N3052RG
https://www.reuters.com/markets/commodities/oil-mixed-opec-supply-cut-prospect-offsets-demand-fears-2022-08-29/
https://www.reuters.com/markets/europe/wall-street-fear-gauge-hits-seven-week-high-2022-08-29/
https://www.cnbc.com/2022/08/29/us-bonds-in-focus-after-powell-signals-further-interest-rate-hikes.html
https://www.fxstreet.com/news/eur-usd-to-fall-to-09600-or-lower-wells-fargo-202208291300