Market Drivers – US Session – Friday, July 15

Mohamed Abdelhamid 16 July, 2022 3:38 am Commodities, Forex Market, Market Update

Following a meeting with Crown Prince Mohammed bin Salman in Jeddah, though US president Joe Biden said he expected Saudi Arabia to take further steps to increase the oil supply in the coming weeks, oil surged 2.5% on Friday after a US official said that an immediate Saudi oil output boost was not expected, and as investors question whether OPEC has the room to significantly ramp up crude production.

The comment during US President Joe Biden’s visit to the kingdom comes at a time when spare capacity at members of OPEC is running low.

Economic Data

The US dollar briefly gained on Friday after data showed that US retail sales increased more than expected in June. Retail sales increased 1% for the month, better than the Dow Jones estimate of a 0.9% rise. That marked a big jump from the 0.1% decline in May, a number that was revised higher from the initial report of a 0.3% drop.

Active drilling rigs in the US rose by 4 to 756, the highest since March 2020 and 56% more than a year ago, according to the latest weekly survey from Baker Hughes.

Other data showed that manufacturing production slumped for a second straight month in June and US consumers tempered their inflation expectations in July. Manufacturing output fell 0.5% last month, matching the decline in May, the Federal Reserve said on Friday.

At 2.8%, consumer inflation expectations for the next 5-10 years are well within the past decades range, or what is considered well-anchored. This is welcome news after expectations rose to the top end of their recent range in the preliminary June release and raised concerns that expectations were becoming unhinged.

University of Michigan’s Consumer Confidence July report has showed an unexpected modest rebound in the main index. Inflation expectations are cooled. This could represent welcome news for Fed’s policymakers and it makes the pressure to go big at the next FOMC meeting less intense after this week’s scorching CPI reading.

Other Developments

The dollar slid lower on Friday as investors evaluated how high the Fed is likely to raise interest rates by when it meets later in July. Investors also took profits after a strong USD’s rally that sent the American currency to a two-decade high. The dollar briefly gained on Friday after data showed that U.S. retail sales increased more than expected in June. read more

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Oil rises 2% as no immediate Saudi output hike expected