Viewing future contracts, major rate cuts across the ocean are moving away from us. In the USA, the data is neutral, but the dollar remains at very low levels. In the crude oil market, investors initiated a correction at the end of the week.
Data from the USA
On Friday, we received two major readings from the USA. First, at 14:30, we received data about American income and expenditure. Both results came in below expectations and are bad news. Expenditure growing by 0.2% instead of 0.3% means less revenue for businesses. On the other hand, incomes increasing by 0.2% instead of 0.4% as speculated, means less consumption in the future. However, these data were balanced by the better-than-expected University of Michigan Index, which reached 70.1 points. This is not only 0.8 points better than expectations, but also a situation that has been rare recently, where business sentiment indexes perform solidly.
Correction on oil at the end of the week
On Friday, we also saw data from the USA about the number of active oil drilling rigs. After a week of stabilization, this value slightly decreased. The reason is the current fear of a surplus of crude on the market. Justifications are seen both from the excess production capacity caused by signals from Saudi Arabia, and from the demand side. Here, the problem is the expected economic slowdown in the major economies that buy the most crude. So why did the week end with a rise in oil prices? It was a correction at the end of a very weak period. From Tuesday, the values in peak moments slipped by 4.5 dollars per barrel to the level of 70.5 dollars. The rebound of 1.5 dollars up to 72 was therefore more of a correction after too strong initial reactions rather than an improvement in the situation.
Change of expectations across the ocean
In addition to the data mentioned above, it is also worth noting the changes in expectations towards the interest rates. We return to the concept of a single rate cut in November. So far the markets have assumed a drop of 0.5%. A change to 0.25% is of course an element that should work in favor of the recently weak dollar. On the other hand, we still have a total of three cuts predicted by the end of the year, as the second one has now been moved to December. This is why the currency markets are taking these changes rather neutrally.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: https://ceo.com.pl/korekta-cen-ropy-i-zmiany-w-prognozach-stop-procentowych-w-usa-86797
