Oil prices under pressure ahead of US inventory data
Global oil prices declined on Tuesday away from three-week highs on profit-taking ahead of initial data on US crude stocks.
Later today, the initial report from the American Petroleum Institute will be released and will count the changes in commercial crude stocks in the US.
Prices
US crude fell 0.5% to $77.20 a barrel, while Brent declined 1.5% to $81.28 a barrel, with a session-high at $82.77.
US crude rose 1.3% on Monday, while Brent added 1.1% resuming gains back then and approaching three-week highs.
Analysts point to continued concerns about Red Sea shipping as a factor in increasing oil prices quickly, which overshadowed the expected delay in Federal Reserve rate cuts this year.
Recent attacks by Yemen’s Houthi group on global shipping through the Red Sea caused a spike in shipping prices and longer shipping times, with the group launching a rocket on an oil tanker on Monday according to US Central Command.
US President Joe Biden expressed hopes for a ceasefire in Gaza before Ramadan.
US Stocks
Later today, initial data from the American Petroleum Institute on US crude stocks will be released, expected to show another weekly buildup.
Dollar hovers near three-week trough ahead of important data
Dollar declined in European trade on Tuesday against a basket of major rivals, extending losses for another session and on track for three-week lows as US 10-year treasury yields dipped as well.
Now investors await a batch of important US data later today in addition to remarks by Fed officials, which could provide fresh clues on the likely path ahead for monetary policies.
The Index
The dollar index fell 0.2% to 103.61, with a session-high at 103.81, after closing down 0.2% on Monday, approaching three-week lows at 103.43.
US Yields
US 10-year treasury yields fell 0.6% on Tuesday, hovering near two-week lows and pressuring the greenback.
The developments come as traders await a batch of important US data later today, which could offer fresh pricing for the likelihood of interest rate cuts in March, May, and June.
US Rates
Markets are now expecting a 2.5% chance for a Federal Reserve March rate cut, and a 20% chance for a May rate cut, and a 64% chance for a June cut.
Investors now expect 75 basis points of total US rate cuts this year, down from 150 basis points in previous forecasts.
Data
Now investors are waiting for a basket of important US data later this week, including GDP growth, unemployment claims and personal spending data, to gauge the likely path ahead for policies.
Gold hovers near two-week high as dollar slips
Gold prices rose in European trade on Tuesday, approaching two-week high as the dollar declines against a basket of major rivals.
Now investors await important US data and Fed remarks today, which could provide fresh clues on the future of interest rates.
Gold Prices Today
Gold prices rose 0.25% to $2036 an ounce, with a session-low at $2030, after closing down 0.25% on Monday on profit-taking, away from a two-week high at $2,041.
The Dollar
The dollar index fell 0.15% on Tuesday, extending losses for the second session, on track for three-week lows at 103.43 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
The current decline comes as US 10-year treasury yields taper off as markets wait for more clues on the future of US interest rates.
US Rates
Markets are now expecting a 2.5% chance for a Federal Reserve March rate cut, and a 20% chance for a May rate cut, and a 64% chance for a June cut.
Investors now expect 75 basis points of total US rate cuts this year, down from 150 basis points in previous forecasts.
Now investors are waiting for a basket of important US data later this week, including GDP growth, unemployment claims and personal spending data, to gauge the likely path ahead for policies.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat yesterday at 827.81 tonnes, the lowest since July 31, 2019.
Sterling backs off three-week high on profit-taking
Sterling fell in European trade on Tuesday against a basket of major rivals, on track for the first loss in six days against the dollar away from three-week highs on profit-taking.
There are no important UK data this week that could change the odds of future UK interest rates, with investors focusing on US data released this week.
GBP/USD
GBP/USD fell 0.1% to 1.2674, with a session-high at 1.2688, after closing up 0.1% on Monday, the fifth profit in a row, hitting a three-week high at 1.2710.
UK Rates
Recent UK and inflation data is pointing to a likely UK rate cut in May, skipping March and April.
There’s less than a 15% chance for a Bank of England interest rate cut in March, with an over 50% chance for such a cut in May.
Traders now expect 71 basis points on average in UK rate cuts this year, down from 134 basis points in previous forecasts.
Bailey
Bank of England Governor Andrew Bailey said in recent remarks the BOE might not wait for 2% inflation before cutting interest rates, noting that the UK economy has already exited its recession.
US Rates
Markets are now expecting a 2.5% chance for a Federal Reserve March rate cut, and a 20% chance for a May rate cut, and a 64% chance for a June cut.
Now investors are waiting for a basket of important US data later this week, including GDP growth, unemployment claims and personal spending data, to gauge the likely path ahead for policies.