Daily Economic news by ForexMart

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February 8. Gold is getting cheaper on the expectation of a faster Fed rate hike

On Tuesday, the price of gold was declining as the US dollar rose in anticipation of inflation statistics. Investors predict that the Federal Reserve will signal an aggressive tightening of monetary policy and multiple interest rate hikes this year.

The spot price of precious metals in the morning declined to $1816 per ounce, recovering during the day to $1820.

Inflation data in the United States will be published on Thursday. The consumer price index for January is expected to show an annual growth of 7.3%, which would be the highest jump since 1982. And as experts note, high inflation may force the Fed to tighten policy faster, which will lead to an increase in the opportunity costs of owning non-profitable gold.

Additional support for gold is provided by the ongoing tensions around Russia and Ukraine, as the precious metal is used as a safe haven asset.

As for the other metals, palladium fell today to $2200, silver declined to $22,777, and platinum fell to $1004.25 per troy ounce.

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February 10. Oil reserves in the United States unexpectedly fell, production increased

According to the weekly report of the Energy Information Administration of the US Department of Energy, commercial oil reserves for the week ended February 4 unexpectedly decreased by 4.8 million barrels to 410.4 million barrels. Analysts, on the contrary, expected an increase of 400 thousand barrels.

At the same time, the strategic reserve of oil in the country decreased by 1.4 million barrels to 587.5 million barrels. And oil reserves at the country's largest terminal in Cushing decreased during the reporting period: from 30.5 million barrels to 27.7 million.

In addition, the report indicated a decrease in gasoline inventories by 1.6 million barrels to 248.4 million. Analysts had expected an increase of 1.6 million barrels. Distillate stocks decreased by 0.9 million barrels to 121.8 million barrels. A decrease of 1.7 million barrels was predicted.

Oil production

The Ministry also shared statistics on oil production in the United States. Its indicators increased by 100 thousand barrels per day to the level of the previous week – up to 11.6 million barrels.

On average, over the past four weeks, production in the United States amounted to 11.6 million barrels per day.

It is worth noting that on February 8, the Ministry of Energy raised the forecast of average oil production in the country by the end of this year to 11.97 million, and next year to 12.6 million barrels per day.

February 9. ECB on the verge of tightening monetary policy

German Central Bank Governor Joachim Nagel suggested that the European Central Bank could raise interest rates this year, as inflation is likely to remain high for longer than expected.

Nagel, who headed the Bundesbank in January, also said that if the inflation picture does not change by March, Germany will advocate the normalization of monetary policy. And the first step to this is to stop net bond purchases during 2022.

The head of the European regulator itself, Christine Lagarde, also said last week that inflation in the eurozone will remain at an elevated level for longer than the ECB expected. Moreover, Lagarde said that the regulator can no longer rule out the scenario of a rate hike in 2022. Such a «hawkish» bias, following December comments that the ECB is unlikely to raise rates in the new year, had an immediate impact on European debt yields.

At the same time, Lagarde tried to reassure investors, assuring that any changes in the ECB's policy would be gradual.

Experts believe that the first ECB rate hike is likely to occur in the fourth quarter of the year, and the next round will take place in early 2023. Inflation in the eurozone is expected to be around 4% throughout the year. The current inflation rate is 5.1%.

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February 11. The US stock market fell on inflation data

US stock indexes fell sharply after the publication of statistics on inflation in the United States.

According to the Ministry of Labor, consumer prices (CPI) jumped 7.5% in January compared to the same month in 2021, which was a record inflation rate since 1982. In December last year, the growth rate of consumer prices accelerated by 7%.

After the release of the data, the yields of American government securities jumped sharply. The interest rate of ten-year US Treasuries has risen above the 2% mark for the first time since 2019.

The stock market did not stand aside either: indicators of all 11 S&P 500 industry groups ended trading in the red on Thursday, the subindex of technology companies most sensitive to interest rate hikes fell by 2.1%. The value of Qualcomm Inc. shares decreased by 5.3%, Advanced Micro Devices Inc. – by 5.3%, Adobe Inc. – by 5.1%, Apple Inc. – by 2.3%.

The Dow Jones Industrial Average index fell by 526.47 points (1.47%) to 35241.59 points by the close of the market on Thursday.
The Standard & Poor's 500 declined by 83.1 points (1.81%) to 4504.08 points.
The Nasdaq Composite lost 304.73 points (2.1%) to 14,185.64 points.

Analysts expect that high volatility in the stock market will continue until the March Fed meeting, at which the key rate is likely to be increased.

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February 14. Gold has risen to a maximum of three months due to geopolitics

Gold prices jumped on Monday amid increased demand for protective assets due to high geopolitical tensions on the border of Russia and Ukraine.

In particular, the precious metal quotes reached the level of $1.864.85 per ounce, which became a three-month high.

Over the weekend, it became known that the adviser to the American president on national security, Jake Sullivan, said that Russia has the opportunity to attack Ukraine without waiting for the end of the Olympics in Beijing. After that, a telephone conversation took place between the Presidents of the United States and Russia Joe Biden and Vladimir Putin, but he could not ease the tension.

The American president ruled out the possibility of sending American soldiers to Ukraine, but threatened Moscow with large-scale sanctions in the event of an invasion. At the same time, Russia continues to deny its intention to attack Ukraine.

Despite the departure of investors in the assets of the «safe haven», the growth of gold is restrained by the strengthening of the dollar. The dollar is also considered a reliable asset, plus it receives support due to expectations of an imminent increase in the base interest rate of the US Federal Reserve System.

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February 15. Japan's GDP growth was 5.4%, worse than forecast

In the fourth quarter of 2021, Japan's economy grew by 5.4% compared to the same period in 2020. Experts expected the growth to be 5.8%.

The quarterly growth of the Japanese economy in October-December amounted to 1.3% compared to the previous three months – and this was the maximum growth rate for the year. Analysts had forecast the figure at 1.4%.

In the third quarter, according to the revised data, the volume of GDP decreased by 0.7%, and not by 0.9%, as previously reported.

Business investment in the last quarter increased by 0.4%, exports increased by 1%, imports decreased by 0.3%. Government spending decreased for the first time in 3 quarters – by 0.3%.

Experts note that despite the fact that the Japanese economy returned to growth in the last quarter of last year, the increase in the incidence of Covid-19 in the first quarter of this year is likely to limit further recovery.

It is noted that the expansion of the Japanese economy in the fourth quarter is mainly due to an increase in consumer spending by 2.7%. Costs have increased as the lifting of quarantine restrictions in Tokyo and other cities of the country since September 30 has led to a sharp increase in demand for services. It is also worth noting that in the current quarter, new quarantine measures were re-introduced, as another spike in morbidity is observed in the country.

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July 27. The yuan came under pressure amid problems in the Chinese housing market​​​​​​​

On Wednesday, the Chinese yuan showed a decline against the background of weak demand for loans, which led to a reduction in REPO rates.

Today it became known that short-term REPO rates on the continental market fell below 1% for the first time since January 2021 under the pressure of excessive liquidity and restrained demand for loans.

Analysts note that with very low real interest rates in China, it is possible that the Chinese economy falls into a liquidity trap. And to maintain its growth, additional fiscal stimulus and loosening of the regulation of the real estate market may be required. The traditional easing of monetary policy now is not expected to effectively support economic growth.

Before the market opened, the People's Bank of China set the median rate at 6.7731 yuan per US dollar against 6.7483 yuan on Tuesday.

Additional pressure on the Chinese currency is exerted by the expectation of the outcome of the US Federal Reserve meeting and the rate decision. Investors are also waiting for a telephone conversation between Chinese Leader Xi Jinping and US President Joe Biden scheduled for Thursday.

It is also worth paying attention to the statistics released today: in June, the profit growth of manufacturing companies in China resumed and amounted to 0.8% compared to June last year. In May, the indicator decreased by 6.5%.

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August 8. The oil market remains under pressure​​​​​​​

Yesterday, oil prices again showed a decline in the area of multi-month lows – to the level of $93.20 per barrel. Today, Brent crude managed to recover to the level of $94.25.

Pressure on the oil market continues to be exerted by investors' fears that rising interest rates and a slowdown in the global economic recovery will have a significant negative impact on demand.

The worries of market participants intensified yesterday after the Bank of England decided to raise the base interest rate to 1.75% from 1.25% per annum, at a record pace since 1995. At the same time, the British regulator noted that it expects a decline in the UK economy in the fourth quarter of 2022, and this decline will last throughout 2023.

However, a number of analysts believe that it is too early to say that the world economy is in recession. Moreover, sharp fluctuations in the oil market due to the current global economic conditions make it difficult to forecast a deficit or surplus of production for 2022.

On August 3, OPEC+ decided to increase oil production in September by 100,000 barrels per day, and this decision is aimed at studying the market reaction and may be revised.

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August 9. Oil prices rise on news of limited supplies to Europe

The oil market continues to show an upswing that began during yesterday's trading session. The quotes were supported by the news that Ukraine suspended the pumping of oil from Russia to Hungary, the Czech Republic and Slovakia.

The price of Brent rose from $93.20 per barrel to $98.30 during the day. The current quote of the asset is $97.66 per barrel. WTI grade oil shows similar dynamics: the asset rose from the level of $87.40 to $92.60. The current quote of North American oil is $91.60 per barrel.

The news about the restriction of Russian oil supplies to Europe against the background of the ongoing energy crisis provides significant support to oil prices. Back on August 4, the Ukrainian national company Ukrtransnafta stopped pumping Russian oil through the southern branch of the Druzhba oil pipeline system, since the Russian side cannot make a payment for transit under EU sanctions.

Additional support for oil prices is provided by the depreciation of the US dollar against world currencies. The dollar index declined by 0.37% to 106.04 points.

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August 10. Crypto market news​​​​​​​

Bitcoin has sharply increased in price by $1.000 and exceeded the level of $24.000 after the release of inflation data in the United States. The current BTC quote is $24.077, over the past day the cryptocurrency has risen in price by 3%. The cost of bitcoin increased after the US Department of Labor reported an increase in consumer prices in the country by 8.5% year-on-year in July.

The Coinbase crypto exchange recorded a loss of $1.1 billion in the second quarter. This became known from the company's financial report. Coinbase has suffered due to a sharp decline in trading volumes caused by the collapse of cryptocurrency quotes in recent months. In particular, the price of bitcoin has dropped by almost 70% from the historical maximum set in November 2021.

The developers of the Phantom cryptocurrency service announced the results of an investigation into the hacking of 9230 Solana wallets and the theft of $4.08 million in cryptocurrency that occurred on August 3. The representatives of the project found out that all the affected addresses were related to the Slope mobile application – they were created, imported or used in it. Further investigation is ongoing.

In China, more than 12 thousand accounts in local social networks were blocked, the owners of which promoted and advertised the cryptocurrency. Also, Chinese web platforms have deleted more than 51 thousand posts with illegal advertising of earnings through investing in bitcoin.

The Robinhood cryptocurrency service, by court decision, will pay compensation totaling $9.9 million to all users affected by platform outages in 2020. Then the blocking of traders' operations led to significant losses, as at the same time the financial markets showed record growth results.

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August 11. US stock exchanges continue to rally​​​​​​​

The main US stock indexes opened trading on Thursday with growth, continuing to follow the dynamics of the previous day. The market was supported by data indicating a slowdown in inflation in the United States.

In particular, the Dow Jones Industrial Index (DJIA) rose by 0.79% to 3,3571.43 points, the NASDAQ index of high-tech companies – by 0.98% to 1,2981.20 points, the S&P 500 broad market index – by 0.88% to 4,247.12 points.

Yesterday, the US Department of Labor reported that annual inflation in the country slowed down more than expected by the end of July – from 9.1% to 8.5%. On a monthly basis, consumer prices did not change, while analysts expected them to grow by 0.2%.

Market participants expect that the slowdown in inflation will force the US Federal Reserve System to begin easing monetary policy. According to the survey, 63.5% of analysts expect the regulator to raise its base rate by 50 basis points, although earlier the markets predicted a third increase in a row by 75 bp.

Investors also paid attention to the data on applications for unemployment benefits. Their number has grown to 262 thousand, while analysts expected an increase to 263 thousand. The indicator of the previous week was revised from 260 thousand to 248 thousand applications.

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August 15. The European market is growing at the beginning of the week​​​​​​​

European stock indexes are growing moderately at the beginning of a new trading week. And investors continue to analyze weak statistics on the Chinese economy.

The German DAX index is trading near the values of the previous session (13.786,72). The CAC 40 in France rose 0.2% to 6,533.12 points, and the British FTSE 100 was trading 0.2% higher than the previous close at 7,539.65.

Economic data from China showed that the pace of economic growth in the country unexpectedly slowed in July, which forced the central bank of China to reduce the key lending rate from 3.70% to 2.75%. Industrial production in July increased by 3.8% compared to a year earlier, but the growth rate was lower than the expected 4.6%. Retail sales increased by 2.7% compared to a year earlier, while failing to meet forecasts of 5.0% growth and 3.1% growth observed in June.

In Europe, the European Central Bank raised interest rates by half a point in July and is expected to do the same in September. The tightening of the ECB's monetary policy comes despite the fact that the risk of recession in the eurozone has reached its highest level since November 2020. And all because of record inflation against the background of a shortage of energy carriers.

Corporate news of European companies

Shares of AstraZeneca PLC rose 2.6% after the drugmaker announced that its anti-cancer drug Enhertu slowed the progression of a form of breast cancer in previously treated patients.

Shares of Henkel AG & Co. Stocks rose 0.4% after the German consumer goods company reported that its sales volume increased in the first half of the year, but profits declined due to rising prices for raw materials and logistics.

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August 16. Gold falls on expectations of the next move by the US Federal Reserve

On Tuesday, the price of gold continues to decline moderately – pressure on prices is exerted by expectations of further tightening of monetary policy by the US Federal Reserve.

During yesterday's trading, the precious metal fell from $1818 to $1789 per ounce. The current gold quote is $1791.

Analysts believe that the further dynamics of gold prices will depend on the policy of the US Federal Reserve. Investors expect further growth of the discount rate, which is negative for the precious metal quotes. Tomorrow, the minutes of the July meeting of the US Federal Reserve will be published, which should clarify the issue of how the monetary policy of the regulator will change. If the central bank's rate is raised by 75 basis points in September, gold may continue to fall.

The «hawkish» policy of the American regulator is holding back gold from rising in price, which explains the inability of the asset to gain a foothold at a price above $1800 per ounce. At the same time, some experts say that the process of reducing the rate will not begin even next year.

Additional pressure on gold quotes yesterday was exerted by data from China. According to recent statistics, the country's economic recovery is on the decline, which may lead to a decrease in physical demand for gold from the world's largest consumer.

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August 17. Macroeconomic events of the day | August 17​​​​​​​

New Zealand

The Central bank of New Zealand has introduced a policy to combat high inflation in the country, increasing the interest rate by 0.50 basis points – from 2.5% to 3%. This is the fourth year that the New Zealand central bank has raised interest rates.

Great Britain

Inflation in the UK reached double digits for the first time in 40 years: consumer prices rose by 10.1% in annual terms in July. Analysts note that the last time inflation in the UK was above 10% was in 1982. Compared to June, consumer prices increased by 0.7%. At the same time, economists predicted an increase in annual inflation to 9.8%.

Eurozone

According to the second estimate of the European statistical agency Eurostat, the GDP of 19 eurozone countries in the second quarter of 2022 grew by 3.9% year-on-year and by 0.6% quarter-on-quarter. Analysts expected growth of 4% in annual terms and 0.7% in quarterly terms.

The United States

According to the US Department of Commerce, the volume of retail sales at the end of July remained at the level of the previous month – 0.8%. At the same time, analysts expected sales to increase by an average of 0.1%. On a monthly basis, sales increased by 0.7% (excluding gasoline and car sales from calculations).

Oil

According to the official report of the US Department of Energy, commercial oil reserves in the country decreased by 7,056 million barrels per week after an increase of 5 million a week earlier.

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August 18. UBS: oil prices will recover to $125 this year​​​​​​​

UBS bank experts have presented a forecast according to which the price of Brent oil may recover to the level of $125 per barrel by the end of this year.

Analysts are confident that despite the fact that Brent has declined by 25% since mid-June due to fears of a recession, limited global oil reserves will lead to an increase in hydrocarbon prices. Two months ago, oil quotes were located near the level of $125 per barrel, today Brent is trading at $96 per barrel.

In addition to concerns about a possible recession in the United States and China, oil prices are being pressured by the risks of an increase in oil exports from Russia and OPEC member countries, as well as progress in nuclear negotiations with Iran, which could lead to more oil on the market.

However, despite all these factors, UBS still believes that the current decline in oil prices does not fully take into account the limitation of global supply, and by the end of the year the price will be able to recover to $125 per barrel.

As you know, OPEC and its allies agreed to increase production by only 100 thousand barrels per day in September, which is one of the lowest rates in the history of the organization. According to the alliance itself, the actual increase in production in September will be only one third of the agreed increase in supply volumes.

Moreover, European countries have agreed to reduce imports of crude oil and petroleum products from Russia by almost 3 million barrels per day by the end of 2022. High prices for coal and natural gas will also contribute to the increase in the cost of oil, as utility companies begin to switch from expensive fuels to cheaper ones for electricity production.

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August 19. The dollar index rose to highs on the signals of the US Federal Reserve​​​​​​​

On Friday, the US dollar shows strengthening to a one-month high in pairs with major competitor currencies. The dollar index is currently 0.17% higher than Thursday's closing level (107.65); the maximum value of the USDX index was reached on July 18 at 107.72.

The US currency is supported by statements by the heads of the US Federal Reserve on the need for further interest rate increases. Next week, the central bank's symposium will be held in Jackson Hole, and it is expected that representatives of the regulator will give new signals about the dynamics of monetary policy.

Earlier, the president of the Federal Reserve Bank of St. Louis, James Bullard, said that he was leaning towards a third consecutive increase in the key rate by 75 basis points at the Fed meeting in September. His colleague from San Francisco, Mary Daly, also believes that an increase of 50 or 75 points would be quite reasonable. Other representatives of the Federal Reserve are also confident that it is too early to ease monetary policy, since inflation is still at record levels.

Additional support for the dollar was provided by yesterday's data on the labor market in the United States. The number of initial applications for unemployment benefits decreased by 2 thousand from the revised figure of the previous week – to 250 thousand. Unemployment in May remained at the April level of 3.6%, and the number of people employed in non-agricultural sectors of the economy increased by 390 thousand people.

The USD/JPY pair has risen to a maximum since July 28 (136.69) and is preparing for the strongest weekly growth since June 10. EUR/USD is still sideways near the level of 1.0086, and the GBP/USD pair has fallen to a minimum since July 21, 1.1895.

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August 22. Oil prices collapsed amid progress in Iranian talks

Oil prices are falling at the beginning of a new trading week, the current Brent quote is $93.10 per barrel. The daily low was marked at $92.97.

Investors continue to monitor the progress of negotiations between the United States and Iran on the nuclear deal. Last weekend, the next stage of the debate took place, which resulted in the achievement of some progress in the negotiations.

«We may be closer to concluding a deal than it was two weeks ago, but the result remains unpredictable, as some contradictions remain,» a White House spokesman said.

At the meeting, US President Joe Biden discussed with the leaders of France, Germany and the United Kingdom the ongoing negotiations on the nuclear deal and the prospects for the return of Iranian oil to the market in the amount of 1 million barrels per day. The parties also discussed the need to strengthen the support of partners in the Middle East region.

In addition, the market is monitoring the situation in China, where the authorities of Sichuan Province have extended restrictions on the supply of electricity to industrial enterprises to combat power outages. All this negatively affects the activity in the industrial sector of the region.

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August 23. Business activity in the eurozone falls for the second month in a row​​​​​​​

According to preliminary data from the research organization S&P Global, the composite purchasing managers index (PMI) of 19 eurozone countries in August continues to remain below the level of 50 points – the bar separating the growth of business activity from the fall. The indicator decreased from 49.9 points in July to 49.2 points, that is, business activity in the region is falling for the second month in a row.

Nevertheless, the indicator turned out to be higher than the expectations of market participants (49 points).

The indicator of activity in the service sector decreased to 50.2 points (from July 51.2 points), while updating the minimum since April 2021.

The manufacturing PMI fell to 49.7 (from 49.8 points), reaching the lowest value since June 2020.

Germany's composite PMI in August fell to 47.6 points (from 48.1 points), also to the lowest since June 2020. The indicator in the service sector fell to 48.2 (from 49.7 points), while in industry the indicator rose to 49.8 points from 49.3 points a month earlier.

France's composite PMI was 49.8 points compared to July's 51.7 points. The index of business activity in the service sector decreased to 51 from 53.2 points, in the manufacturing industry – to 49 from 49.5 points.

The UK composite PMI in August, although it remained above 50 points, but fell to the lowest since 2021 – 50.9 points from 52.1 points a month earlier. The indicator in the services sector has updated at least in 1.5 years (52.5 points), and in the manufacturing industry – it turned out to be at the lowest level in 27 months (46 points).

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August 24. It will take Germany years to switch to Canadian gas​​​​​​​

German Chancellor Olaf Scholz said that Germany intends to move away from Russian natural gas as soon as possible and switch to Canadian. Earlier, the Prime Minister of Canada has already noted that LNG exports to Germany are possible.

However, despite Canada's willingness to partner with Germany, experts doubt that additional gas shipments may arrive from there in the near future due to the lack of export capacities.

Currently, Canada does not have the infrastructure to export gas abroad – the country is currently only building 2 terminals on the west coast. But it will take at least 3 years to complete the construction of the first terminal, and by that time Europe will have already abandoned Russian fuel. Therefore, it would be more realistic for Germany to turn to countries such as Norway for gas.

Since the introduction of sanctions against Russia, Canada has stated that it has the ability to produce an additional 200,000 barrels of oil and 100,000 barrels of natural gas per day, but due to the lack of infrastructure for export abroad, the vast majority of this fuel is purchased by the United States, which has become the world's largest supplier of LNG.

Before the start of the special operation in Ukraine, Russia supplied 32% of the LNG consumed by Germany. Due to European sanctions, Germany has become one of the countries that have suffered the most due to Europe's rejection of Russian energy resources.

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August 26. Macroeconomic events of the day | August 26​​​​​​​

On Friday, all the attention of the markets is focused on the speech of the head of the US Federal Reserve Jerome Powell at the symposium in Jackson Hole. It is expected that the regulator will confirm its intention to curb inflation, but will not announce the details of its next steps. Many expect an interest rate increase of another 0.75 percentage points in September, while others expect a smaller increase, by half a point.

Powell's speech will take place after the publication of a block of economic data, including on the PCE index, as well as on the expenses and incomes of Americans.

PCE Index

The Personal Consumption Expenditure Index (PCE), the Fed's most preferred inflation indicator, will be published at 12:30 GMT. Analysts expect the underlying PCE to increase by 4.7% compared to last year and by 0.3% compared to the previous month.

Expenses and incomes of Americans

At the same time (12:30), statistics on personal expenses and incomes of Americans will be published. Personal expenses are projected to grow by 0.4% and personal income by 0.6%.

It is noted that middle- and low-income households feel disadvantaged due to rising prices for all basic goods, so they are forced to reduce their expenses. At the same time, retailers are lowering prices to get rid of inventory in preparation for the holiday season.

Powell's performance at Jackson Hole

Despite general expectations, the speech of the head of the Fed is unlikely to bring any specifics to the market. Moreover, before the regulator announces its next decision on the rate, several more important economic data will be published, including inflation and the employment report.

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August 29. Powell's speech provoked the growth of the dollar

On Monday, the US dollar reached a 20-year high against major currency competitors after the speech of the head of the US Federal Reserve Jerome Powell at a symposium in Jackson Hole on Friday. The dollar index peaked at 109.48 points today.

In particular, Asian currencies fell: the Chinese yuan reached a new 2-year low of $6,9321, and the Japanese yen fell to 138.88 against the dollar. The Australian dollar fell to $0.6858, and the New Zealand dollar fell to $0.6109. Paired with the European currency, the dollar rose to $0.9944.

The head of the US regulator said that the Fed does not plan to make «dovish» changes to its rhetoric and intends to further raise the base rate to combat rampant inflation. Powell also warned that the growth of the US economy could be undermined by a rate hike, as households and businesses will inevitably face a number of problems before consumer price growth can be contained.

After the politician's speech, an increasing number of analysts began to predict a rate hike at the September meeting by 75 basis points. The rate is expected to exceed 3% by the end of the year.

Now all the attention of the markets is focused on Friday's report on employment in the United States (Non-Farm Payrolls). A strong report on the labor market may give the Fed additional opportunities to maintain the current pace of monetary policy tightening.

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August 30. Oil prices are recovering moderately after yesterday's fall​​​​​​​

World oil prices are recovering weakly on Tuesday after falling below the level of $100 per barrel. A day earlier, Brent was trading at $103.25 per barrel.

The possible prospects for a reduction in oil supply and a decrease in demand in the markets led to an increase in prices yesterday. Investors' fears intensified after the statement by the Saudi Energy Minister that OPEC may cut production.

At the same time, expectations of an increase in demand appeared after the statement of the famous entrepreneur Elon Musk that humanity may soon need more oil and gas, since without fossil energy carriers «civilization will collapse.»

In addition, the situation in Libya affects the dynamics of the oil market. Over the weekend, clashes between two armed groups took place in Tripoli, as a result of which more than 30 people were killed. This has raised fears that Libya is waiting for another full-scale conflict, as a result of which oil supplies to the world market will be reduced.

Meanwhile, the volume of production in the country remains at the same level of 1.2 million barrels per day, as reported by the state-owned Libyan oil company National Oil Corp.

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August 31. Inflation in the eurozone in August reached a record 9.1%​​​​​​​

According to the Statistical Office of the European Union, consumer prices in the eurozone increased by 9.1% in annual terms in August. In July, the price increase was 8.9%, so inflation accelerated again and updated the maximum since the beginning of calculations.

The fresh indicator exceeded the forecasts of analysts who expected less significant growth – by 9%. Inflation exceeds the European Central Bank's target of 2% by more than four times.

The CPI index (consumer prices excluding food and energy) in August increased by 4.3% year-on-year compared with 4% in July.

Energy resources increased in price by 38.3% compared to August last year, but the growth rate slowed down slightly compared to the rise of 39.6% a month earlier. Food, alcohol and tobacco rose by 10.6% (by 9.8% in July), industrial goods – by 5% (by 4.5%), services – by 3.8% (by 3.7%).

On a monthly basis, consumer prices increased by 0.5% in August. In July, this indicator increased by 0.1%.

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September 5. The pound has collapsed to its lowest since 1985​​​​​​​

On Monday, the British pound collapsed to its lowest since 1985. At the moment, the exchange rate of the GBP/USD currency pair fell to the level of $ 1.1444, losing 0.55%.

The main pressure on the pound sterling is exerted by the current strengthening of the US dollar, as well as the economic situation in the UK itself. Analysts fear that due to the energy crisis in the country, many households will not be able to pay bills in winter.

In addition, doubts about the ability of the Bank of England to cope with record inflation are another factor for the weakening of the British currency. Experts expect that inflation in the UK will reach 22% next year due to an increase in the cost of energy resources, which could lead to a fall in the economy by 3.4%.

Additional pressure on the pound is exerted by uncertainty about the economic policy of the new British Prime Minister Liz Truss. Today it became known that Truss, the British Foreign Minister, was elected head of the Conservative Party and prime Minister of the country. Truss scored 81.3 thousand votes, thus overtaking ex-Finance Minister Rishi Sunak, for whom 60.4 thousand people voted.

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September 6. The pound is growing on the promises of the new British Prime Minister​​​​​​​

The British pound is rising on Tuesday after the publication of more detailed information about how Liz Truss, who became the new prime minister of Britain, intends to deal with the energy crisis in the country.

It is reported that in October, electricity and heating tariffs for households were supposed to be increased by 80%, but Truss promised that she was going to freeze tariffs for this winter. And this may cost the country's budget more than the employment support program during the pandemic.

As a result, the British pound managed to move away from the lows of 1985, which the currency approached during yesterday's trading ($ 1.1444 per 1 pound). The current quote of the GBP/USD pair is $1,1609. At the same time, analysts note that the pound continues to remain near the lows for 2.5 years amid concerns about the price that the UK will have to pay for the support of the population.

It is worth noting that the country's public debt has already grown to almost 100% of GDP from 80% before the pandemic. In general, during the pandemic, sterling declined against the US dollar by 15%, the annual inflation rate exceeded 10%, and economic growth almost stopped.

During her election campaign, Truss hinted at lower taxes, which led to a decline in UK government bonds. In August, the drop in their prices was the deepest in several decades, because investors feared a balance of payments crisis.

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September 7. Macroeconomic events of the day | September 7​​​​​​​

The US stock market is declining on Wednesday after the end of the Labor Day holiday weekend. Investors are waiting for new economic data and comments from representatives of the US Federal Reserve System this week.

The next Fed meeting will take place only at the end of the month, but some Fed officials are expected to speak this week, including Jerome Powell. The Fed's Beige Book (economic summaries of regional banks) will be published today.

Market participants expect that the US regulator will continue to raise the rate by another 0.75 percentage points to combat high inflation.

What should I pay attention to today:

The Fed's beige book.

The periodic report of 12 regional banks of the Federal Reserve will give an idea of what is happening in manufacturing, services and other business sectors, as well as consumer behavior. The beige book will be published at 18:00 GMT.

The decision of the Bank of Canada on the rate

Another interesting event of the day will be the meeting of the Board of the Bank of Canada. The regulator is expected to raise the refinancing rate from 2.5% to 3.25%. Such a sharp increase could lead to a steady increase in the Canadian dollar.

Eurozone GDP

Gross domestic product in the eurozone increased by 0.8% in the second quarter of 2022, which exceeded the growth of 0.6% according to the second estimate and was the highest growth rate in three quarters. Despite the current growth, the energy crisis in Europe continues to cause alarm, as the region is cut off from a key natural gas pipeline just a few weeks before the onset of cold weather.

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September 8. Truss will freeze gas and electricity bills for two years​​​​​​​

The new British Prime Minister Liz Truss has revealed the details of her energy plan: from October 1 and for two years, energy prices will be frozen. Now the average annual gas and electricity bill will not exceed 2,500 pounds.

The envisaged measures will cost the UK budget about 150 billion pounds ($172 billion). At the same time, Trass has not yet announced exactly how this assistance program will be funded.

Given that the new Prime Minister is actively in favor of reducing taxes on the population and has repeatedly spoken out against the introduction of a tax on excess profits of companies, it can be assumed that covering the difference between real energy prices and the amount that will be charged to citizens will be at the expense of government loans. In the future, they will be paid over the next 10-20 years by adding to consumers' energy bills.

According to Truss, the new measures will save each household a thousand pounds. The country already has support measures in the form of a discount on energy bills in the amount of 400 pounds this winter, which was announced under the previous British Prime Minister Boris Johnson.

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September 9. The London Stock Exchange stopped trading after the death of Elizabeth II

Last night, the London Stock Exchange stopped trading after the news of the death of Queen Elizabeth II appeared. Trading should recover on September 9. In addition, the country's parliament, the government, as well as the legislative bodies of Scotland, Wales and Northern Ireland have also suspended their work.

Queen Elizabeth II of Great Britain has died at the age of 96, according to Buckingham Palace. Elizabeth became Queen in 1952, and this year she celebrated the 70th anniversary of her reign, the longest in the history of the country.

The new king of the country was the son of Elizabeth II, 74-year-old Prince Charles. The new British monarch will rule under the name Charles III.

The Bank of England announced that banknotes with the image of Elizabeth II will remain legal tender.

The British pound reacted to the news of the Queen's death by rising to the level of 1.1609. A little earlier, on the news about the deterioration of the Queen's physical condition, the British FTSE 100 index also started to grow, to the level of 7,382.60.

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September 12. Economic events of the day | Great Britain

Monday started with a block of data from the UK – on the country's GDP and industrial production.

According to the country's national bureau of Statistics, the British economy grew by 0.2% in July, while analysts had forecast growth of 0.4%. It is noted that such a decrease was the result of a reduction in energy generation as a result of tariff increases in the country. In June, the UK economy shrank by 0.6%.

The volume of industrial production in July decreased by 0.3% compared to June. Analysts believed that the indicator would increase by 0.4%. In annual terms, industrial production increased by 1.1%, while experts expected an increase of 1.9%.

In June, industrial production decreased by 0.9% on a monthly basis, and increased by 2.4% on an annual basis.

In August, the Bank of England predicted that a recession would begin in the British economy at the end of this year, which would last until the beginning of 2024. Last week, the new Prime Minister of Great Britain, Liz Truss, announced a massive program of support for the population, promising to limit electricity and heating tariffs. It is reported that this program will cost the country's budget 100 billion pounds or more, which will further worsen its condition.

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September 13. Gold declines after the release of US inflation data​​​​​​​

The price of gold fell sharply on Tuesday after the publication of inflation statistics in the United States. Annual inflation in the country decreased to 8.3% in August after 8.5% in July. Analysts predicted an even bigger decline – up to 8.1%. The fact that the current indicator fell short of forecasts caused expectations of an even tougher approach of the US Federal Reserve System to monetary policy.

The daily minimum price for December gold futures was $1,706.95; the asset collapsed from the level of $1,742.75 per ounce. December silver futures are down 1.05% to $19.652 per ounce.

Analysts note that additional tightening of monetary policy in the United States will be positive for the dollar and the yield of the US government debt and negative, respectively, for commodities and assets used as a «safe haven». According to experts, 82% of analysts already expect the Fed's discount rate to increase by 0.75 percentage points, to 3-3.25% per annum.

Analysts are also confident that a rate hike in September is already a settled issue. Moreover, in November, the rate cut will most likely not happen.

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September 14. Oil declines on U.S. inventory data​​​​​​​

World oil prices are declining on Wednesday morning amid a significant increase in its reserves in the United States.

According to the American Petroleum Institute (API), commercial oil reserves in the country unexpectedly jumped by 6 million barrels. At the same time, analysts expected a decrease of 200 thousand.

The publication of the IEA report and statistics from the Ministry of Energy of the country is expected this evening. If the official report confirms the growth of reserves, oil quotes will continue their decline.

On Wednesday morning, Brent quotes are near the level of $92.50 per barrel, having declined from the area of $93.80. The cost of North American WTI oil hovers at $87 per barrel.

In addition to the data on reserves, the upcoming speech by the President of the European Commission, Ursula von der Leyen, who is going to present a number of proposals to contain the oil crisis in her speech to the European Parliament, may have an impact on the dynamics of the market.

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September 15. Ethereum has completed a long-awaited upgrade to its system​​​​​​​

Ethereum has completed an important long-awaited upgrade to its system – The Merge. It involves the transition of the altcoin from the Proof-of-Work protocol to Proof-of-Stake (PoS). This means that now the security of the blockchain will be provided not by miners, but by validators – users who have deposited and blocked their share of coins (stacking).

The main purpose of the update is to reduce the problems associated with the growth of the users number. The hard fork is aimed at increasing the speed, efficiency and scalability of the cryptocurrency network so that it can process more transactions and provide a higher level of protection.

The Merge has been in preparation for six years, and many consider it an important milestone in the history of cryptocurrency due to the potential material and ideological consequences. The update should show that a decentralized and public network can work in the most energy efficient way.

In addition, the transition to a new environmentally friendly Proof-of-Stake model will lead to a reduction in the impact on the environment. The new protocol will consume 99.95% less energy than the current mining model. Moreover, the transition of Ethereum to the Proof-of-Stake concept does not involve the use of video cards for mining. And this will lead to a further reduction in prices for graphics accelerators.

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September 19. Bitcoin is aiming for 2020 lows

During Monday's trading, the bitcoin exchange rate dropped to $18,313 for the first time since the end of 2020. Pressure on the cryptocurrency is exerted by investors' withdrawal from risks before the meeting of the US Federal Reserve System scheduled for Wednesday.

Most analysts expect that the US regulator will raise the base interest rate by 75 basis points for the third time in a row, or even by 100 bp at once.

The current quote of the BTC/USD pair is $18,756.90. Since the beginning of this year, bitcoin has fallen in price by 60% and is currently trading at the level of December 2020.

In the current conditions, risk appetite remains extremely weak, and the entire crypto market is showing a decline following the fall of stock markets. Additional pressure on the market is being exerted by signals that the administration of US President Joe Biden plans to tighten regulation of the cryptocurrency industry.

It's not just bitcoin that is falling today. The cost of the second most popular cryptocurrency, Ethereum, is also declining and is at its lowest level since July. The current price of ether is $1,280. Last week, an update of the cryptocurrency software, called The Merge, was carried out on the Ethereum network. This update has transferred the ether blockchain to a new algorithm, which will dramatically reduce electricity consumption during mining.

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September 22. The Bank of England raised the rate by 50 basis points to 2.25%​​​​​​​

Following the results of the September meeting, the Bank of England decided to raise the base interest rate from 1.75% to 2.25% per annum. This decision completely coincided with analysts' expectations.

Thus, the rate in the UK has reached its maximum since 2008. Experts note that the rate was raised following the results of the seventh meeting in a row, and the second meeting in a row the increase was 50 basis points.

All nine members of the Monetary Policy Committee (MPC) voted unanimously for the rate increase. Moreover, five were in favor of a 50 bps rise, three were in favor of a 75 bps increase, and one voted for a 25 bps increase.

In addition, the leadership of the British regulator voted to begin reducing the volume of government bonds on the balance sheet of the central bank. Now the volume of government bonds at the disposal of the Bank of England will be reduced by 80 billion pounds over the next 12 months and will reach 758 billion pounds.

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September 23. Gold prices fell to a 2-year low​​​​​​​

According to trading data, gold prices have fallen to the lowest levels in more than two years. December gold futures on the New York Mercantile Exchange COMEX collapsed from the level of 1.682 to 1.648.60 per ounce. The last time gold was traded at such levels was in April 2020.

Analysts note that the precious metal quotes are declining for the second week in a row after many central banks around the world raised interest rates to curb inflation.

In particular, the US Federal Reserve, as well as the Central Banks of Switzerland, Norway and the UK announced an increase in interest rates to curb price growth. And as we know, gold, which is traded in the US currency and does not bring any guaranteed interest income, usually has a negative correlation with the dollar exchange rate and rates.

Experts suggest that the negative dynamics in the gold market is very likely to continue due to further tightening of monetary policy by some major central banks. Because against the background of higher rates, the costs of owning gold are growing.

At the same time, fears of a recession and any escalation of the conflict in Eastern Europe may support the prices of the precious metal.

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September 26. The yield of 10-year British government securities rose to the highest since 2008

Yields of British government securities are rising at the beginning of a new trading week: on Monday, the yield of ten-year bonds rose to 4.246% compared with 3.827% at the close of the market on September 23, which was the highest since 2008. The yield on two-year government securities rose to 4.418% from 3.911%.

The growth is supported by expectations that the Bank of England will have to sharply raise the rate, as the large tax incentives announced by the government last week will inevitably lead to a further increase in inflation.

On September 23, British Finance Minister Quasi Kwarteng announced a large-scale tax cut that will affect individuals and legal entities. It is expected that these measures will increase the budget deficit in the current financial year by more than 70 billion pounds. At the same time, the minister clarified that he does not exclude further tax breaks.

The stimulus measures of the new UK government will require an increase in the issuance of government bonds, which is one of the factors pushing down their value.

Market participants expect the Bank of England to raise the base rate by 100 basis points at the November meeting. However, there is an opinion that the Central Bank may raise the rate until November, in an attempt to contain the fall in the national currency. An increase in interest rates may exacerbate difficulties in the economy, since the tightening of monetary policy reduces the disposable incomes of the population and leads to an increase in the cost of mortgages.

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September 27. Iraq: oil may rise to $150 per barrel​​​​​​​

The price of oil on the world market may reach $150 per barrel in the coming months. This was stated by Iraqi Foreign Minister Fuad Hussein in an interview on the sidelines of the UN General Assembly.

And there are significant risks here: if oil prices rise in winter, it will hit the economies of countries that do not produce oil. In addition to the seasonal factor of rising prices for hydrocarbons, the Iranian politician noted the impact of anti-Russian sanctions on the cost of oil.

On Tuesday, the commodity asset is steadily growing after yesterday's fall to the level of $82.46: the current Brent quote is $85.54 per barrel. The driver of growth is concerns due to a reduction in supply on the market.

Also, traders continue to monitor the gathering strength of Hurricane Jan in the Gulf of Mexico. Chevron Corp has already announced the suspension of the operation of two production platforms, the total production volume of which is about 120 thousand barrels per day. British BP also intends to close two platforms in the region, the production volumes at each of which exceed 100 thousand barrels per day.

In addition, the decision of the OPEC+ countries to reduce the volume of oil production, as previously repeatedly stated by representatives of the alliance, can support oil prices. In particular, in order to maintain prices at $90 per barrel, OPEC will need to reduce production by 1 million b/d. In the meantime, the organization can reduce production by at least 500 thousand b/s.

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October 3. The pound rose sharply after the British authorities rejected the budget plan​​​​​​​

The pound jumped sharply on Monday after the British government announced the cancellation of a plan to reduce taxes for the rich, which was a shock to the market and scared investors.

British Finance Minister Kwasi Kwarteng said today that the government is ready to abandon the plan to abolish the 45% maximum income tax rate. Against this background, the pound reached $ 1.1263 in a pair with the US dollar.

Last Monday, the British currency fell to a record low of 1.0356. Investors were scared by the fact that tax cuts would spur inflation and lead to an even faster increase in the interest rate. And this will undermine the already struggling UK economy.

Several members of the ruling Conservative Party also opposed the tax reduction program. Citizens themselves also spoke out against it, judging by the results of public opinion polls.

Earlier, the International Monetary Fund also sharply criticized the new fiscal package, which includes the rejection of the planned increase in the social security tax rate and a reduction in the tax on the purchase of real estate below 250 thousand pounds. Representatives of the IMF said that this would contradict the tightening of the monetary policy of the Bank of England.

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October 4. The Reserve Bank of Australia raised the base rate by only 25 bps​​​​​​​

The Reserve Bank of Australia (RBA) unexpectedly reduced the pace of tightening its monetary policy, noting a deterioration in the global economic outlook. This time, the regulator raised the interest rate by only 25 basis points, to 2.6%. Most analysts expected an increase of 50 bps.

Recall that the RBA raised the rate by 50 bps in June, July, August and September in an attempt to slow down inflation, which may peak by the end of 2022 at about 8%.

«One of the sources of uncertainty is the prospects for the global economy, which have worsened recently,» said the head of the Australian Central Bank, Philip Lowe.

In addition, the RBA fears that the tightening of financial conditions will have negative consequences for consumer budgets and spending.

Earlier, the Australian central bank has already stated that it intends to slow down the pace of rate hikes at some point, as it expects a rapid weakening of inflation in 2023 along with falling commodity prices.

The Australian dollar reacted with a decline to the news about the rate: the AUD/USD pair fell to $0.6470 during trading on Tuesday, compared with $0.6514 at the close of the previous session.

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October 6. Oil rose above the level of $94 per barrel​​​​​​​

Oil quotes on Thursday remain in the area of local highs reached after the announcement of the results of yesterday's meeting of OPEC+ ministers.

The organization decided to reduce quotas for oil production in November by 2 million b/s. Analysts note that this decision signals that Saudi Arabia and the alliance as a whole are striving to stabilize and support oil markets.

At the same time, it is noted that the actual decline in production will be less, since at the moment OPEC+ lags behind the maximum permitted production levels by about 3.6 million b/s. About 1.2 million b/d of the total under–production is accounted for by OPEC countries, and 2.4 million – by OPEC+ countries.

Yesterday, after the end of the ministerial meeting, Brent jumped to the level of $93.90 per barrel. Today, the asset continued to grow and reached $94.44 per barrel. The last time such price values were observed was in mid-September.

Additional support for the oil market was provided by data on fuel reserves in the United States. According to the Ministry of Energy of the country, commercial oil reserves decreased by 1.36 million barrels last week, while analysts predicted an increase of 1.8 million barrels.

Gasoline stocks decreased by 4.73 million barrels, distillate stocks – by 3.44 million barrels. Analysts expected a decrease in gasoline stocks by 1.1 million barrels and a drop in distillate stocks by 1.5 million barrels.

October 5. The New Zealand central bank raised its key rate to a seven-year high

The Reserve Bank of New Zealand (RBNZ) has raised interest rates by 50 basis points to a seven-year high of 3.5%. The regulator also announced its readiness to further raise the rate in an attempt to contain stubbornly high inflation.

The central bank's decision coincided with analysts' forecasts. The current increase was the eighth since the beginning of the monetary policy tightening cycle, which started a year ago. RBNZ accelerated the step from 25 to 50 points in April and has now brought the rate level to the cyclical highs of 2014-2015.

It also became known that the monetary policy committee discussed an increase even by 75 bps, but eventually stopped at half a point.

«It remains appropriate to continue tightening monetary policy at the same pace to maintain price stability and ensure maximum employment,» said the representative of the regulator.

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October 10. Gold is trading below $1700 amid a strengthening dollar​​​​​​​

At the beginning of the new trading week, the price of gold shows a steady decline: on Monday, the precious metal quotes fell below the psychological level of $ 1,700. The current price of gold is $1,673 per troy ounce.

Gold prices have been declining for the fourth consecutive session on the back of the strengthening of the US dollar, supported by strong data on the labor market. Friday's Non-Farm payrolls report showed that unemployment in September fell to 3.5% from August's level of 3.7%, although markets did not expect a change in the indicator. The number of people employed in non-agricultural sectors of the economy increased by 263 thousand, while analysts predicted an indicator of 250 thousand.

Such macro statistics reinforced expectations that the US Federal Reserve will continue to tighten monetary policy, which traditionally supports the dollar and restrains the price of gold.

The dollar index reached a more than 7-day peak (113.225), making gold more expensive for holders of other currencies.

Silver for December delivery lost 3.4% in price and fell to $19,538. Palladium prices fell to $2,216 per ounce, platinum fell to $899.