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Dollar Set for Best Week Since November After Post-Fed Tumble

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The dollar headed for its best week since November, climbing from a nine-month low reached last week, as Federal Reserve policy makers hinted interest rates may rise in the next few months.

The U.S. currency rose against most of its major peers after Fed Bank of St. Louis President James Bullard said officials may be getting close to lifting rates again, provided growth continues as forecast. Government releases on Thursday showed fewer jobless claims than forecast in the week through March 19 and durable goods orders fell less than projected last month. The yen fell for a sixth day against the dollar after a government report showed Japanese investors bought a record sum of overseas bonds and stocks last week.

Investors are slowly shifting back into the greenback after a cautious tone from Fed policy makers at their March 15-16 meeting sent the dollar tumbling. Traders are refocusing on the U.S. economy to evaluate whether incoming data can sustain a rebound in the currency. Employers probably continued to bolster the headcount this month, a report April 1 is forecast to show.

‘More Room’

“The dollar, from a broad perspective, I think there’s probably still some more room to strengthen, if the U.S. data’s good,” said Eric Stein, the Boston-based co-director of global fixed income at Eaton Vance Corp., which oversees around $302 billion. “Again, we get a dovish Fed statement that seems to lead to hawkish commentary afterwards.”

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, is set for a 1.3 percent gain this week, the biggest since the period ending Nov. 6 and added 0.2 percent to 1,201.76 at 11:32 a.m. in Tokyo on Friday. The dollar climbed 0.1 percent to 113.05 yen and rose 0.1 percent to $1.1163 per euro.

Markets in parts of Asia, including Hong Kong and Singapore, Europe and the U.S. are closed Friday for national holidays.

The yen headed for its biggest weekly decline against the greenback since the period ended Jan. 29., the day when the Bank of Japan announced decision to employ a negative interest-rate policy.

Chasing Yields

Japanese investors’ purchases of overseas equity and investment-fund shares as well as bonds totaled 2.59 trillion yen ($22.9 billion) in the week ended March 18, largest amount in Ministry of Finance data going back to 2005.

The increased overseas investment is leading to weakness in the yen, said Kenji Yoshii, Tokyo-based currency strategist at Mizuho Securities Co. “Domestic yields remain in negative zones so investors have no choice but to seek yields abroad. This trend will likely continue.”

Jun Kato, a senior fund manager in Tokyo at Shinkin Asset Management, said the dollar’s advance accelerated after technical resistance of 112.90 yen was broken, with markets eyeing 113.50 as the next target.

“The higher dollar trend is becoming more evident against the yen,” Kato said. “But the move broadly remains within an adjustment from the post-Fed bearishness.”

Gauging U.S. Data

U.S. data have steadily improved over the last few weeks, with Bloomberg’s gauge of economic surprises advancing to the highest in more than a year.

“The next rate increase may not be far off provided that the economy evolves as expected,” Bullard said in New York on Thursday. Futures contracts show traders see a 6 percent likelihood of a rate increase at policy makers’ meeting next month, and a 38 percent probability in June.

The Bloomberg Dollar Spot Index has fallen 2.5 percent this year, after a 9 percent gain in 2015 and an 11 percent rally the year before.

“The data should continue to strengthen, it should continue to surprise a little bit and that should be sufficient for them to go in June,” Binky Chadha, chief global strategist at Deutsche Bank AG, said in an interview on Bloomberg Television. The upside for the greenback may be limited as “the dollar itself has also priced in a lot.”

Bloomberg

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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