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Oil up nearly 3% as OPEC+ agrees to small oil output cut

 

“Don’t be afraid to give up the good to go for the great.” – John D

 

 HEADLINES

 

 

  • Sterling stuck near 2-1/2-year lows as Truss set to become UK's PM
  • Gold firms above $1,700/oz on hopes of less aggressive Fed
  • Oil up nearly 3% as OPEC+ agrees to small oil output cut
  • DAX slides more than 2% after Russian gas shutdown
  • Euro slides below 99 cents after Russia halts gas supplies to Europe
  • USD/CNY: Forex RRR cut unlikely to stem the yuan's weakening trend – ING
  • AUDUSD Near Term: Downside favored

 

 

Sterling stuck near 2-1/2-year lows as Truss set to become UK's PM

 

The pound languished near 2-1/2-year lows against the dollar on Monday, as Liz Truss was set to become Britain's next prime minister after winning a leadership race for the governing Conservative Party against a deteriorating economic backdrop.

The new PM is set to inherit an economy staring at recession, with sterling one of the worst performing major currencies in 2022. The pound has slid 15% against the dollar as inflation surged to double digits and growth grinds to a halt.

British government bonds also suffered their biggest monthly price losses in decades in August, due to inflation fears but also on Truss's planned tax cuts and proposals to stimulate the economy with fiscal spending.

 

 

COMMODITIES

 

 

Gold firms above $1,700/oz on hopes of less aggressive Fed

 

Gold prices held above the key $1,700 per ounce level on Monday, as hopes that the Federal Reserve might slow the pace of rate increases after mixed U.S. jobs data helped offset pressure from a robust dollar.

Spot gold was up about 0.1% at $1,712.89 per ounce by 1302 GMT. U.S. gold futures rose 0.1% to $1,724.10.

However, trading is expected to be thin with most U.S. markets closed for Labour Day holiday.

 

 

ENERGY

 

 

Oil up nearly 3% as OPEC+ agrees to small oil output cut

 

Oil prices rose about 3% on Monday, as OPEC+ members agreed to a small production cut of 100,000 barrels per day to bolster prices.

Prices had climbed nearly $4 earlier in the session, but were tamed by comments from the White House that U.S. President Joe Biden was committed to taking all steps necessary to shore up energy supplies and lower prices.

Brent crude futures for November delivery settled $2.72 higher at $95.74 a barrel, a 2.92% gain. U.S. crude rose $2 to $88.85 per barrel, a 2.3% rise after a 0.3% gain in the previous session, in thin volumes during the U.S. Labor Day holiday.

 

 

STOCKS

 

 

DAX slides more than 2% after Russian gas shutdown

 

Germany's DAX slid more than 2% to lead declines among the European stock indexes on Monday after Russia stopped pumping gas via the Nord Stream 1 pipeline to Europe, sparking worries about surging energy prices and winter shortages in the region.

The Europe-wide STOXX 600 index (.STOXX) closed 0.6% lower, while Germany's DAX index (.GDAXI) ended 2.2% down to log its biggest one-day percentage fall in more than a week.

Shares of Germany's biggest importer of Russian gas Uniper (UN01.DE) dropped 11%, while its Finnish parent Fortum (FORTUM.HE) dipped 8.9% and utility PNE (PNEGn.DE) slipped 4.1%.

 

 

Euro slides below 99 cents after Russia halts gas supplies to Europe

 

The euro fell below 99 cents for the first time in 20 years Monday, after Russia said it would shut off its main gas supply pipeline to Europe indefinitely.

The EU’s common currency was trading around 0.9915 versus the dollar by 1:00 p.m. London time (8:00 a.m. ET), having climbed off lows of $0.9881 hit earlier in the day.

The dollar index, which measures the greenback against six major currencies, also breached a fresh two-decade high as the British pound slid on fears over energy supply and European economic growth.

 

 

ANALYSIS

 

 

USD/CNY: Forex RRR cut unlikely to stem the yuan's weakening trend – ING 

 

“The PBoC cut the forex RRR again this year – this time to 6% from 8% effective 15 September 2022. We believe that this RRR cut will not change the yuan weakening trend. This is because this round of yuan weakness comes from a strong US dollar and the expectation of more Federal Reserve hikes at the coming meetings.” 

“Our USD/CNY forecast is 7.05 by the end of 3Q22.”

“Less aggressive rate hike talk in the market nearer the end of the year might help the yuan to strengthen slightly. As such, we expect USD/CNY to fall to 6.85 by the end of the year.”

 

 

CHART

 

 

AUDUSD Near Term: Downside favored

 

Technical View: Short position below 0.68. Target 0.677. 

Conversely, break above 0.68, to open 0.682.

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/currencies/sterling-stuck-near-2-12-year-lows-truss-set-become-uks-new-pm-2022-09-05/
https://www.reuters.com/markets/europe/gold-firms-above-1700oz-hopes-less-aggressive-fed-2022-09-05/
https://www.reuters.com/markets/europe/oil-prices-climb-more-than-1bbl-ahead-opec-meeting-2022-09-05/
https://www.reuters.com/markets/europe/european-shares-slide-nord-stream-1-shutdown-extends-2022-09-05/
https://www.cnbc.com/2022/09/05/euro-slides-below-0point99-after-russia-halts-gas-supplies.html
https://www.fxstreet.com/news/usd-cny-forex-rrr-cut-unlikely-to-stem-the-yuans-weakening-trend-ing-202209051306
 

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