Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Monday, May 29, 2023

Dollar gains as surprise OPEC+ cut adds to inflation conundrum

Dollar gains as surprise OPEC+ cut adds to inflation conundrum

The dollar rose against other major currencies on Monday as fears over inflation resurfaced after a surprise announcement by major oil producers to cut production targets further, with traders wagering the Federal Reserve may need to increase interest rates again at its next meeting, according to Reuters.
The announcement on Sunday by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, of output target cuts caused oil prices to jump by around 8 percent in early trade in Asia on Monday. Brent crude was last trading at $84.12 per barrel, up $4.21 or 5.3 percent.

OPEC+ had been expected at a meeting on Sunday to stick to cuts of 2 million barrels per day already in place until the end of 2023, but instead announced further output cuts of around 1.16 million bpd.

“A higher oil price will put pressure on global inflation and if we assume the banking turmoil continues to reside then the markets will increasingly focus on the inflation outlook,” said Mohamad Al-Saraf, Associate, FX and Rates Strategy at Danske Bank.

Markets are now pricing in around a 70 percent probability of the Fed hiking rates by a quarter point in May, from around 50 percent on Friday. But, by the end of the year, expectations are priced in for cuts of 40 basis points.

“With oil prices going up it could be a trigger to reverse Fed rate cut pricing,” Danske Bank’s Al-Saraf added.

The euro was last down 0.1 percent to $1.0835, after touching a one-week low of $1.0788 earlier in the session, while the dollar rose 0.5 percent to 133.57 Japanese yen, earlier hitting its highest level since March 17.

Sterling was at $1.2317, down 0.1 percent on the day, while the dollar rose 0.3 percent against the Swiss franc.

On Friday, a report from the US Commerce Department showed that the personal consumption expenditures price index rose 5.0 percent in February from a year earlier, slowing from a 5.3 percent increase in January. A measure of core inflation — seen as a better gauge of future price increases — came in a shade lower than expected at 4.6 percent.

Additional data also showed US consumer sentiment fell for the first time in four months in February on concerns of an impending recession, although the impact of the banking crisis was muted.

Focus this week will be on US activity data and Friday’s jobs report, although many markets will be closed for the Easter holiday.

“Any signs of weakness in the data will likely push dovish bets back higher after the recent big unwinding of rate-cut bets,” said Francesco Pesole, FX strategist at ING.

“Solid data and hawkish Fed comments may help reinforce May Fed hike expectations,” Pesole added, which he said could help build a floor in the dollar.

The risk-sensitive Australian dollar was last up 0.1 percent to $0.6693 ahead of a policy meeting at the Reserve Bank of Australia on Tuesday, with markets placing around an 85 percent chance the central bank will stand pat on interest rates after 10 interest rate hikes.

The kiwi slid 0.4 percent to $0.6230.

In cryptocurrencies, bitcoin was down 1 percent at $27,910. Ethereum last fell 0.2 percent to $1,792.
Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
Pfizer, the EU, and disappearing ink - Smoke, Mirrors, and the Billion-Dose Pfizer Vaccine Deal: EU's 'Open Secret
The Sussexes' Royal Rebound: Could Harry and Meghan Markle Return to the UK?
A provocative study suggests: Left-Wing Extremism and its Unsettling Connection to Psychopathy and Narcissism
Neuralink Receives FDA Approval for First-in-Human Clinical Study
Ukrainian Intelligence Official Admits to Assassination Attempts on Putin
WATCH THIS: democracy in Russia is so bad!
Ed Davey: It is possible for a woman to have a penis
Bernard Arnault Loses $11.2 Billion in One Day as Investors Fear Slowdown in US Growth Will Reduce Demand for Luxury Products
Russian’s Wagner Group leader: “I am not a chef, I am a butcher. Russia is in danger of a revolution like in 1917.”
TikTok Sues Montana Over Law Banning the App
Ron DeSantis Jumps Into 2024 Presidential Race, Setting Up Showdown With Trump
Steve Jobs introducing Apple's iPhone, exactly 16 years ago.
Banking Behemoth vs Ex-Boss: The PMorgan-Epstein Entanglement
China overtakes Japan as world's top car exporter
Talks between US House Republicans and President Biden's Democratic administration on raising the federal government's $31.4tn debt ceiling have paused
Biden Administration Eyeing High-Profile Visits to China: The Biden Administration is heating things up by looking into setting up a series of top-level visits to Beijing by top officials in the coming months
New evidence in special counsel probe may undercut Trump’s claim documents he took were automatically declassified
A French court of appeals confirmed former President Nicolas Sarkozy's three-year jail term for corruption and influence peddling
Debt Ceiling Crises Have Unleashed Political Chaos
Weibao Wang, a former software engineer at Apple, was charged with stealing trade secrets related to autonomous systems, including self-driving cars
Mobile phone giant Vodafone to cut 11,000 jobs globally over three years as new boss says its performance not good enough
Elon Musk compares George Soros to Magneto, the supervillain from the Marvel Comics series.
Warren Buffett Sells TSMC Shares Over Concerns About Taiwan's Stability
New Study Finds That Secondary Bacterial Pneumonia Is a Major Cause of Death in COVID-19 Patients Who Require Ventilator Assistance
The official tapes of Trump's deposition in the E. Jean Carroll battery (rape) and defamation case have been released.
King Charles III being crowned.
Newly released video of Donald Trump’s rape trial deposition:
Video: Ukraine MP Punches Russian Representative At Global Meet
El Paso mayor has declared a state of emergency
Russia accused Ukraine of attacking the Kremlin with drones in an attempt to kill Putin
Dutch court orders man who fathered 550 kids to stop donating sperm
Kim Kardashian Lookalike Christina Ashten Dies Of Cardiac Arrest, Hours After Plastic Surgery
Samsung has banned employees from using generative AI services such as ChatGPT
'Godfather Of AI' Geoffrey Hinton Quits Google To Warn Of The Tech's Dangers
A Real woman
Vermont Man Charged with Stalking After Secretly Tracking Woman with Apple AirTag
Elon Musk Statements About Tesla Autopilot Could Be 'Deepfakes,' Lawyers Claim. Judge Evette Pennypacker Does Not Understand How Far and Advanced This Technology Became
Ukraine More Prepared for Counterattack as Reinforcements Arrive
Tucker Carlson is back, soon!
China Unveils Construction Road Map for Lunar Research Station
NetEase Launches Low-Code Platform to Help Businesses Develop Custom Apps
AT&T's Successful Test of Satellite-Based Phone Call Raises Possibility of Widespread Coverage
CNN: "Joe Biden is asking for four more years — when 74% of Americans think the country is heading the wrong way“
Turkish President Recep Tayyip Erdogan Cuts Short Live TV Interview Due to Health Issue
5 men dressed as women agree that ALL white people are racist.
President Biden announced his campaign to run for a 2nd term.
Justin Trudeau vs. Trudeau Justin
US Congresswoman threaten Twitter Files journalist with arrest
Pulitzer Prize-winning journalist Seymour Hersh slams New York Times' pro-government stance and treatment of sources
Enough is enough: it's time to end the war in Ukraine. While Russia may be to blame for starting it, Russia is not the one refusing to stop it
×