EUR/USD 1.12125
-0.023%
Gold 4017.56
-0.167%
Oil 99.673
1.020%
USD/JPY 157.052
0.186%
GBP/USD 1.33963
-0.021%
GBP/JPY 210.395
0.166%
Browse More
  • English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
On October 23, as the sell-off in tech stocks intensified, investors flocked to traditional safe-haven assets, including the yen, Japanese government bonds, and US Treasuries, pushing the yen to its highest level in over a month. After trading within a narrow range for several weeks, the yen broke out of this range in the past 24 hours, currently reaching its highest level since September 18 (the day the Bank of Japan raised interest rates). During Fridays Tokyo trading session, the yen rose as much as 0.4% against the dollar, hitting 156.08; previously, it had already recorded a 0.9% gain on Thursday. Asian stocks followed Wall Street lower, influenced by continued investor withdrawals from tech stocks. The price of Japans benchmark 10-year government bond surged, with yields falling 10 basis points; US Treasuries largely maintained Thursdays gains. "The yen is more favored than the dollar as a safe-haven asset," said Carol Kong, a strategist at Commonwealth Bank of Australia. "This weeks earnings reports from major U.S. tech companies have raised questions about the AI-driven U.S. growth narrative." She added that the yen could strengthen further against the dollar if the unwinding of tech stock positions intensifies.October 23 – Japans core consumer inflation exceeded the central banks 2% target for the first time in nine months in September, indicating expanding price pressures and reinforcing the case for a recent interest rate hike. These figures highlight that the protracted Middle East conflict pushing up fuel costs, a weaker yen leading to higher import prices, and strong AI demand are eroding the effectiveness of government fuel subsidies. Masato Koike, senior economist at Sompo Institute Plus, stated that core inflation is expected to accelerate due to rising energy costs caused by the Middle East conflict and its subsequent second-round effects. However, since prices are not accelerating sharply, a second rate hike in October is almost unnecessary, and the next rate hike by the Bank of Japan is expected in December. Marcel Tiliant, head of Asia Pacific at Capital Economics, expects the Bank of Japan to maintain its policy unchanged next week but will hint at continued concerns about upside risks to inflation. There is little evidence that the tightening so far has slowed the economy, and risks are tilting towards a peak policy rate higher than Capital Economics 2% forecast.Gold prices weakened on Friday, on track for their biggest weekly drop in over four months. Soaring oil prices and strong U.S. economic data fueled expectations that the Federal Reserve will maintain high interest rates for an extended period. High energy prices reinforce these expectations, increasing the opportunity cost of holding non-yielding gold. Last week, U.S. initial jobless claims fell to their lowest level in nearly 57 years, indicating a modest recovery in job growth in October. Market focus has now shifted to the Federal Reserves policy meeting on October 27-28 and next weeks PCE data release. The PCE data is a key indicator closely watched by the Federal Reserve.The yield on Japans two-year government bonds fell 6 basis points to 1.840%.On October 23, Turki al-Maliki, a spokesman for the Saudi-led coalition, stated on social media that they had intercepted and destroyed a ballistic missile launched by Yemens Houthi rebels towards the Saudi capital, Riyadh. Earlier, air raid sirens were sounded in Riyadh, and multiple explosions were heard.

WTI anticipates further losses below $88, as recession concerns increase and the US ISM PMI is anticipated

Daniel Rogers

Sep 01, 2022 15:29

 截屏2022-06-10 下午5.32.03_1024x576.png

 

Futures for West Texas Intermediate (WTI) on the New York Mercantile Exchange (NYMEX) are on the verge of breaking to the negative from a thin consolidation between $88.54 and 89.32 during the Tokyo session. The asset has abandoned the psychological support of $90.00 as western central banks prepare for a new cycle of rate hikes to combat inflation mayhem.

 

On worldwide markets, price pressures are intensifying. The favored inflation gauge of the European Central Bank (ECB), the Harmonized Index of Consumer Prices (HICP), has surpassed 9% due to surging energy costs.

 

The US economy's inflation rate has shown signs of weariness but continues to hover above 8.5%, which is far above the target rate of 2%. And inflationary pressures wreak the most havoc on the British economy. According to a Citi study, long-term inflation forecasts have skyrocketed to 4.8%, much over the Bank of England's (BOE) target of 2%.

 

Moreover, the dismal Caixin Manufacturing PMI data has contributed to the decline in oil prices. The economic data has been revised down to 49.5, below the consensus estimate of 50.2 and the previous report of 50.4. Notably, China is the greatest importer of oil, and a drop in oil consumption by the largest importer is sufficient to pull the price of black gold down.

 

In addition, the price of black gold has failed to profit on the recent reduction in oil inventories published by the Energy Information Administration (EIA). The oil inventories have decreased by 3,326 million barrels, as opposed to the previously stated decrease of 3,282 million barrels.

 

The US ISM Manufacturing PMI has substantial weight in today's session. The consensus forecast for economic statistics is 52, compared to the previous reading of 52.8. A recurrence of the same will increase the pressure on oil prices as recession fears intensify.

Suggestion