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JPMorgan Chase lowered its price target for GE Aviation from $400 to $375.Goldman Sachs: Global oil transportation costs have increased approximately sevenfold in the past year due to wars in the Middle East.On October 21st, Morgan Stanley stated that even if current war-related supply disruptions ease, the global refined petroleum products market is likely to remain tight until mid-2027. This is due to an unusually large increase in refinery maintenance, constraining global supply. Morgan Stanley analysts, including Martin Ratz, noted in a report that planned refinery shutdowns for maintenance are expected to increase daily capacity by 3.4 million barrels by the second quarter of next year. This is 2.5 times the normal level and exceeds the current production cuts by Middle Eastern and Russian refineries. The nearly eight-month-long Middle East war, and the recent escalation of attacks on each others energy infrastructure by Russia and Ukraine, have created a tight fuel supply situation globally. For fuels such as diesel, a significant reduction in exports has led to price increases exceeding those of crude oil. Diesel is crucial for transportation, heating, and industrial production. Analysts pointed out that refineries previously postponed maintenance to maximize profits. However, maintenance "cannot be postponed indefinitely." They added that while a large number of maintenance shutdowns were initially expected in the second quarter of next year, this scale has been expanding over time. Furthermore, by then, refinery operating rates are unlikely to see a significant rebound.A report released by Google, Temasek Holdings, and Bain & Company shows that AI will drive Southeast Asias digital economy by about 17%, to $368 billion.Morgan Stanley: Even if current war-related disruptions ease, the refined petroleum products market is likely to remain tight in supply until mid-2027, as “an unusually large number of refinery maintenance activities” are constraining global supply.

Despite a reduction in oil prices, USD/CAD falls to 1.3550; US PCE inflation is forecast

Daniel Rogers

Oct 28, 2022 15:25

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During Friday's Asian session, the USD/CAD accepts bids to retest the intraday low near 1.3550, reversing the previous day's recovery from the monthly low.

 

Thus, the Loonie pair disregards the recent decline in Canada's key export item, WTI crude oil, as the US Dollar Index (DXY) consolidates its gains from the previous day in response to the recent decline in hawkish Fed wagers.

 

Despite this, the DXY dips to 110.50, following Thursday's recovery from the five-week low, as Fed hawks receive contradictory information regarding the overall strength of US data. In the third quarter, the Gross Domestic Product (GDP) of the United States climbed 2.6% on an annualized basis, exceeding estimates (Q3). Nevertheless, a fifth consecutive decline in private consumption presented a challenge to Fed hawks, as it demonstrated that policymakers are gradually approaching the target of slowing down private domestic demand. This may favor easy rate hike discussions for December at the Federal Open Market Committee (FOMC) meeting the following week.

 

Notable obstacles to the US dollar are the sluggish US Treasury yields and the mood of risk aversion. US 10-year Treasury rates reached a two-week low on Thursday and are heading for their first weekly loss in eleven weeks, which encouraged equities to enjoy a decent week despite the most recent decline in the statistics.

 

At home, the Bank of Canada's (BOC) 0.50 percent rate hike, as opposed to the 0.75 percent expected, joins the optimism of officials to keep USD/CAD bears upbeat.

 

The US Core PCE Price Index for September, which is expected to increase to 5.2% from 4.9% previously, will be crucial for the future direction of the USD/CAD pair. A better reading of the Fed's preferred inflation indicator might increase interest rates and hawkish Fed bets, which will benefit pair buyers.

 

In conjunction with the pair's prolonged trading below the 21-DMA barrier near 1.3700, bearish MACD signals encourage sellers. To imply more losses, however, a daily close below the support zone of 1.3505-3495 is required.


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