Oil prices nosedive ahead of Fed meeting
2023-06-13
Summary:
Global stocks gained ground, hitting their highest level in more than a year on Monday, while U.S. Treasury yields and the dollar were virtually unchanged.
Global stocks gained ground, hitting their highest level in more than a year on Monday, while U.S. Treasury yields and the dollar were virtually unchanged.
However, oil fell around 4% with Brent crude futures closing at their lowest level since December 2021 on concerns about weak demand and rising global supplies, with rate uncertainty and inflation data added to worries.
Gold prices dipped as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and the Fed’s meeting.
Commodities
Goldman Sachs cut its oil price forecasts early on Sunday, citing higher-than-expected supplies later this year and through 2024.
The bank's December crude price forecast now stands at $86 a barrel for Brent, down from $95, and at $81 a barrel for WTI, down from $89.
The OPEC and the IEA will each release their monthly market updates on Tuesday. China’s lackluster recovery is weighing on oil demand.
Forex
Traders are pricing in a roughly 75% chance of the Fed keeping rates steady, and a 25% chance of a 25-basis-point rate hike, according to the CME FedWatch tool.
Conversely, a clear majority of economists polled by Reuters expect the ECB to hike its key rate by 25 basis points on Thursday and again in July, before pausing for the rest of the year as inflation remains sticky.
The RBBZ last month signaled it was done tightening after raising rates to the highest in more than 14 years at 5.5%, sending the kiwi tumbling 2.7% in May.
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