10/09/2024 Daily Reports
The US dollar remained stable in early trading on Tuesday, while the yen slightly pulled back from its recent one-month highs. Investors are now shifting focus to upcoming U.S. inflation data and re-evaluating expectations for the Federal Reserve’s interest rate decision next week.
Friday’s mixed labor report left uncertainty about whether the Fed will implement a standard 25 basis point rate cut or a more substantial 50 basis point reduction at its Sept. 17-18 meeting.
Market attention is now turning to Wednesday’s consumer price index (CPI) data for further guidance. The headline CPI is expected to show a 0.2% rise for August, the same as the previous month. However, with the Fed signaling that employment data has become a more critical factor than inflation, traders are watching to see how this may influence the pace of rate cuts.
ING economists noted that while economic growth appears to be slowing, the focus is now on whether the U.S. economy will experience a “soft” or “hard” landing.
Additionally, the U.S. Presidential debate, scheduled for later on Tuesday, is expected to be closely watched by investors, as it could impact market sentiment ahead of the November election.
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Oil Prices Drop as Weak Demand Counteracts Gulf Storm Supply Disruptions
Oil prices dipped on Tuesday as sluggish demand from China counterbalanced supply interruptions caused by Tropical Storm Francine, and ongoing concerns about a global oil surplus kept pressure on the market.
On Monday evening, the U.S. Coast Guard mandated the suspension of all activities at Brownsville and other minor Texas ports due to Tropical Storm Francine moving through the Gulf. Meanwhile, the port of Corpus Christi stayed operational but under certain restrictions.
The National Hurricane Center (NHC) predicted that the tropical storm would intensify markedly over the next few days and was anticipated to develop into a hurricane by Monday night or Tuesday morning.
ANZ analysts, referencing data from the NHC, stated that up to 125,000 barrels per day (bpd) of oil production could face disruption. Despite this, the market remained pressured by signs of declining global demand and ongoing concerns about a persistent oil oversupply. China’s data released on Monday indicated that consumer inflation accelerated in August to its highest rate in six months. However, domestic demand continued to be weak, and producer price deflation intensified.
On Tuesday, investors will be closely monitoring the monthly oil market report from the Organization of the Petroleum Exporting Countries (OPEC). Additionally, the U.S. Energy Information Administration is scheduled to release its short-term energy outlook, which will include forecasts for the global market and U.S. crude oil production.
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