- Dollar Dented by Trump’s Fed Comments
The dollar fell versus the euro and pound Tuesday after US President Donald Trump hit out at the Federal Reserve’s interest rate rises, accusing it of not backing his economic plan, while most equity markets climbed looking ahead to China-US trade talks.
The dollar, on the ascent in recent months thanks to Fed rate rises and a robust US economy, stumbled after Trump’s latest criticism of the central bank.
In an interview with Reuters published on Monday, the president said he was “not thrilled” with the rate rises under new Fed boss Jerome Powell, repeating comments made last month about the bank’s tightening measures.
“The dollar has slipped in response to President Trump’s comments, though the underlying upward trend remains intact,” VTB Capital economist Neil MacKinnon said on Tuesday.
“Most Fed-watchers are of the view that Powell is emphasising the need for financial stability and with a positive US economic backdrop is obliged to tighten policy. There is little indication that he will accede to any demands from President Trump to halt monetary tightening,” he added.
When Trump was asked if he believed in the Fed’s independence, he refused to say yes, telling the reporter: “I believe in the Fed doing what’s good for the country.”
The Fed is expected to raise rates twice more this year.
Higher-yielding and emerging market currencies — from South Korea’s won and the Indonesian rupiah to the Australian dollar and Mexican peso — also rose against the dollar Tuesday, having come under pressure last week from the Turkey financial crisis.
In his interview, Trump accused the European Union and China of manipulating their currencies, adding that Beijing was weakening the yuan to offset the effects of US tariffs.
Traders were meanwhile turning their attention to the China-US talks due Wednesday and Thursday.
The trade meeting will be the first since the world’s top two economies started imposing tit-for-tat tariffs on billions of dollars’ worth of goods, with the Wall Street Journal saying they are aimed at smoothing the way ahead of a November summit.
They also come despite Washington continuing to push through fresh measures slated for Thursday.
“Dealers are optimistic about the trade talks between the US and China, despite the less cheery tone from Washington DC and Beijing,” said market analyst David Madden at CMC Markets UK.
“The relative calm surrounding the Turkish lira is also adding to the positive mood on the continent,” he added.
In Europe, Frankfurt’s DAX 30 closed the day with a gain of 0.4 while the CAC 40 in Paris rose 0.5 percent. London’s FTSE 100 index was the odd man out, shedding 0.3 percent.
On Wall Street, the Dow added 0.2 percent in late morning trading, while the S&P 500 also rose to near the record high it set in January, as the US signalled it could delay a closely-watched decision to impose new tariffs on autos.
Commerce Secretary Wilbur Ross told the Wall Street Journal he would hold off on a final decision on whether to impose tariffs on auto imports while trade talks with Mexico, Canada and Europe are ongoing.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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