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Ukraine’s President Volodymyr Zelenskyy said the country will “certainly respond to every blow” by Russia. The safe-haven US dollar index fell this morning.
The UAE Central Bank raised its benchmark borrowing rates by 25 bps to 4.9% at its recent meeting. Despite this, the AED/USD forex pair remained under pressure.
The Macau Monetary Authority hiked its base rate by 25 bps to 5.25% at its recent meeting. However, the MOP/USD pair fell in forex trading this morning.
Japan’s Reuters Tankan sentiment index for manufacturers improved to -3 in March, from February’s reading of -5, lending support to the JPY/USD forex pair.
The Hong Kong Monetary Authority boosted the base rate by 25 bps to 5.25% at its March meeting. However, the HKD/USD pair fell slightly in forex trading this morning.
What’s happening: Crude oil prices recorded gains on Wednesday, after recording sharp declines last week.
What happened: Crude received support from a declining US dollar, with the greenback falling to a six-week low.
Oil prices rose to a one-week high, despite an unexpected increase in US crude inventories last week.
Why it matters: Oil prices fell sharply last week, declining to their weakest level since 2021 on concerns around a banking crisis negatively impact energy demand. An emergency takeover of Credit Suisse Group AG by UBS Group AG lent some support to oil prices earlier this week.
Weakness in the US dollar provided support to oil prices on Wednesday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell to its weakest level since February 3. Any weakness in the US dollar makes commodities, including crude oil, cheaper for foreign currency holders and raises demand.
The US EIA (Energy Information Administration) said crude stockpiles had risen by 1.1170 million barrels in the week ended March 17, versus market expectations of a decline of 1.565 million barrels.
However, data released by the API (American Petroleum Institute) showed a smaller increase of 3.262 million barrels. US crude stockpiles have been growing since December, pushing inventories to their highest level since May 2021.
Gasoline stocks contracted by 6.4 million, the most since September 2021, while distillate stockpiles fell by 3.313 million, the most since October 2022.
The Federal Reserve announced its policy decision on Wednesday, raising interest rates by 25 bps, marking its ninth consecutive rate hike. The recent rate increase sent the target fed funds rate to new highs since 2007.
Brent futures gained $1.37 to close at $76.69 per barrel, while WTI crude added $1.23, or 1.8%, to settle at $70.90 per barrel on Wednesday. Both crude benchmarks recorded their strongest settlement since March 14.
In other commodities trading, wholesale gasoline for April delivery gained 5 cents to $2.59 a gallon, while April heating oil added 5 cents to $2.74 a gallon. April natural gas declined 18 cents to $2.17 per 1,000 cubic feet on Wednesday.
What to watch: Investors will keep an eye on global oil demand. The IEA sees China driving an increase of 2 million barrels in daily global oil demand in 2023.
Markets will also monitor moves by the OPEC+ (The Organization of the Petroleum Exporting Countries and its allies), with the group expected to continue its output cuts of 2 million bpd (barrels per day) until yearend.
Context: Markets in Europe closed higher on Wednesday, as investors monitored the latest economic data.
Details: Data released on Wednesday showed a surprise increase in UK inflation. The country’s annual inflation rate accelerated to 10.4% in February, from 10.1% in the prior month, recording the first rise in four months. Analysts had expected inflation to ease to 9.9% in February. Core CPI also increased to 6.2%, also exceeding market expectations.
UK’s producer inflation, meanwhile, eased to 12.1% year-over-year in February, from 13.5% in the prior month.
The Bank of England is scheduled to announce its monetary policy decision today, with markets expecting policymakers to hike rates by 25 basis points. The US Federal Reserve increased its interest rates by 25 bps at its March meeting after the closing of European markets on Wednesday.
ECB President Christine Lagarde reaffirmed the central bank’s determination to bring inflation back to the 2% level in the Eurozone.
The STOXX Europe 600 Index gained 0.15% to close at 447.16 on Wednesday, after paring gains recorded earlier during the session. Food and beverage stocks were among the top performers, while financial services stocks lost around 1%.
Bank stocks swung between gains and losses and settled slightly lower by around 0.2%, after recording sharp gains on Tuesday. Shares of Credit Suisse Group fell around 6%.
London’s FTSE 100 gained 0.41% to close at 7,566.84 on Wednesday, while Germany’s DAX 40 and France’s CAC 40 added 0.14% and 0.26%, respectively.
What are expectations: Investors await economic data on consumer confidence from the Eurozone today. The region’s consumer confidence indicator is expected to improve slightly to -18 in March, from -19 in February.
The European Council meeting and a speech by ECB’s chief economist, Philip Lane, will also remain in focus today.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.63%, 1.65% and 1.37%, respectively.
| Technical Levels | News Sentiment |
| EUR/USD – 1.0880 and 1.0889 | Negative |
| GBP/USD – 1.2284 and 1.2291 | Negative |
| WTI Crude Oil – 70.00 and 70.16 | Positive |
| Copper – 4.0424 and 4.0544 | Negative |
| Dow Jones – 31864.57 and 32344.90 | Positive |
| Futures at 0400 (GMT) | ||
| EUR/USD (1.0894, 0.34%) | Dow ($32,387, 0.40%) | Brent ($75.96, -1%) |
| GBP/USD (1.2311, 0.33%) | S&P500 ($3,987, 0.40%) | WTI ($70.18, -1%) |
| USD/JPY (130.69, -0.57%) | Nasdaq ($12,756, 0.39%) | Gold ($1,978, 1.5%) |
Turkey’s consumer confidence, foreign exchange reserves and Central Bank of Turkey’s interest rate decision, South Africa’s consumer confidence, Mexico’s retail sales and mid-month inflation rate, US building permits, current account, Chicago Fed National Activity index, Initial jobless claims, continuing jobless claims, new home sales, natural gas stocks change, Kansas Fed composite index and Kansas City Fed’s manufacturing production, India’s money supply M3, as well as Argentina’s leading economic index and retail sales.
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