Market Drivers – US Session 30/09/2022

Mohamed Abdelhamid 1 October, 2022 3:00 am Commodities, Forex Market, Market Update

Oil prices dipped on Friday in mixed trading but notched its first weekly gain in five on Friday, underpinned by the possibility that OPEC+ will agree to cut crude output when it meets on October 5. Brent crude futures for November, which expire on Friday, fell 53 cents, or 0.6%, to $87.96 a barrel. The more active December contract was down $2.07 at $85.11. US West Texas Intermediate (WTI) crude futures fell $1.74, or 2.1%, to $79.49.

The dominating US dollar recorded its strongest quarter in at least 7 years as investors search for robust safety havens. The dollar has also wrapped up its biggest quarterly climb in at least seven years on Friday, along with its largest four-month advance since November 2008.

The US Dollar Index DXY rose 7.2% through Friday, putting it on track for the biggest quarterly gain since the first three months of 2015, when the dollar index rose 9%.

Gold saw a key development mid-week as prices rose from 2.5-year lows and headed towards the $1,700 per ounce. At the time of writing, at the week’s end as well as the end of September 2022, the precious metal is trading at $1,662.28, up more than 1% on the week but down for the sixth month in a row.

Economic Data

The Fed officials’ remarks coincided with the release of the latest reading of the Fed’s preferred measure of inflation, which showed price pressures remain a problem.

The Personal Consumption Expenditures price index rose 6.2% in August from the same month a year ago, a small moderation from the 6.4% year-over-year increase seen in July. But when stripped of food and energy costs, the index increased 4.9% from August 2021, versus the 4.7% year-over-year rise seen in the month before.

Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil rose by two to 604 this week.

Other Developments

Fed policymakers united on combating inflation as evidenced by Fed’s Vice Chair Lael Brainard who stressed, on Friday, that any rate cut would be premature. Brainard added her full support of US central bank’s higher for longer plan for interest rates to combat inflation that is still at more than three times as much as the 2% target.

San Francisco Fed President Mary Daly said that lowering inflation is the central bank’s main mission, and Richmond Fed President Thomas Barkin said he was more worried about inflation becoming sticky than in the prospect that the central bank had pushed too hard with its rate hikes.

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Fed policymakers united on combating inflation