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What’s happening: Oil prices rose sharply on Monday amid the easing of US economic downturn concerns.
What happened: Oil prices recovered from a one-and-a-half-year low reached on May 4 after falling for three straight weeks.
A strong NFP (nonfarm payrolls) report from the US helped oil extend gains on Monday.
Why it matters: The US Labor Department released a stronger-than-expected jobs report for April on Friday. The report showed an increase of 253,000 nonfarm payrolls last month, higher than market expectations of 180,000.
The unemployment rate also fell to a 53-year low of 3.4% in April. Strength in the US jobs market helped crude rise around 4% on Friday.
Despite closing higher on Friday, Brent recorded losses of around 5.3% for the week. WTI crude ended the week lower by around 7.1%. Both crude benchmarks recorded losses for three straight weeks, with concerns around the banking sector.
Some members of the OPEC+ (Organization of the Petroleum Exporting Countries and allies) will start a round of voluntary production cuts this month. The group is scheduled to hold its meeting on June 4.
WTI crude oil for June delivery rose by $1.82 to $73.16 per barrel on Monday, while Brent crude for July delivery added $1.71 to $77.01 per barrel.
In other energy trading, wholesale gasoline for June delivery rose 8 cents to $2.46 a gallon, while June heating oil added 7 cents to $2.38 a gallon and June natural gas increased 10 cents to $2.24 per 1,000 cubic feet on Monday.
What to watch: Investors await the OPEC’s monthly oil market data, scheduled for release on Thursday, which will offer demand and supply projections. Markets will also watch US consumer price data for April, due for Wednesday. The annual inflation rate in the US had eased for a ninth straight month to 5% in March and is expected to slow further to 4.9% in April.
The release of data on crude oil stockpiles by the API (American Petroleum Institute), due on Tuesday, and by the EIA (Energy Information Administration), scheduled for Wednesday, will also remain in focus.
Context: The GBP/USD forex pair fell on Monday, after hitting an over one-year peak earlier in the day.
Details: The sterling started the week with sharp gains, climbing to its highest level versus the greenback since April 2022.
The US dollar remained under pressure during the initial part of the session but gained strength as the trading day progressed. The US dollar index, which measures the currency’s performance versus a basket of major peers, gained around 0.15% to 101.38 on Monday.
Traders await the Bank of England’s policy decision on Thursday. The UK central bank is widely expected to hike interest rates to 4.5%, matching the recent 25 bps rate hike by the US Federal Reserve and the ECB (European Central Bank).
This would make it the BoE’s 12th rate increase in a row, the steepest rise since 1989. Despite the continuous rake hikes by the UK central bank, inflation in the country has eased much less than policymakers expected. UK’s inflation rate had decelerated to 10.1% in March, from 10.4% a month ago, remaining higher than the central bank’s projection of 9.2%.
The GBP/USD forex pair fell around 0.1% to 1.2618 on Monday after surging to as high as 1.2668 earlier in the session.
What are expectations: Traders await data on the UK’s Halifax house price index today. The Halifax house price index, which rose by 0.8% in March, is expected to rise by 0.3% in April. Analysts expect the index rising by 0.9% year-over-year in April, following 1.6% annualised growth in the previous month.
Other Markets: US trading indices closed mixed on Monday, with the S&P 500 and Nasdaq 100 up by 0.05% and 0.25%, respectively, and the Dow Jones index down by 0.17%.
Russia launched the biggest kamikaze drone attack so far, marking the fourth attack in the last eight days on Kyiv. The news sent the safe-haven US dollar slightly higher this morning.
Australia’s retail sales rose by 0.4% to A$35.30 billion in March, in-line with the flash reading, which exerted some pressure on the AUD/USD forex pair.
The Philippines reported a widening of its trade deficit to $4.93 billion in March, from $4.59 billion in the year-ago month, which sent the PHP/USD pair lower in forex trading this morning.
Japan’s average cash earnings rose by 0.8% year-over-year in March. Nominal wages rising for the 15th straight month lent support to the JPY/USD forex pair.
New Zealand’s electronic card transactions rose 6.4% on an annual basis in April, slowing from the 15.5% surge in the earlier month. The news sent the NZD/USD pair lower in forex trading this morning.
France’s balance of trade, current account and foreign exchange reserves, US NFIB small business optimism index, Redbook index and IBD/TIPP economic optimism index, Central Bank of Brazil’s Copom meeting minutes, Mexico’s inflation rate, car production and auto exports, as well as Argentina’s industrial production.
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