Asia Weekly Review and Outlook!

Asia Weekly Review. Let’s see what happened in various sessions.

What Occurred during the US Session?

Following a remarkable decrease of 17 million barrels last week, the EIA reported a 5.9 million barrel rise in crude oil inventories. This is surpassing the estimated increase of 2.1 million barrels. Combined with the unexpected growth in API stockpiles earlier in the week, the most recent inventory data indicates a decrease in demand within the US. Nevertheless, crude oil prices remain high. WTI oil is approaching the $84 per barrel range, supported by Saudi Arabia’s commitment to extending their output cuts until September. This continues to uplift this commodity.

What Does This Signify for the Asia Session?

Crude oil prices are predicted to rise slightly this morning. While the dollar index (DXY) reached 102.50 overnight due to recent hawkish comments from various FOMC members during the past week, boosting demand for the US dollar. With the release of US CPI scheduled for later today, the markets might be relatively calm this morning as traders eagerly await the latest inflation data.

The Dollar Index (DXY)- Asia Weekly Review

What Can We Anticipate for DXY Today?

Headline CPI has been gradually decreasing since its peak of 9.1% in June 2022, while the core reading exhibited some downward movement in the last month’s report. Nonetheless, the forecast for headline CPI implies a 3.3% year-over-year increase in July, compared to June’s reading of 3.0%. If both the headline and core figures surpass their respective forecasts, a substantial rise in the DXY is highly likely.

Meanwhile, unemployment claims exceeded predictions last week. Another robust reading could underscore emerging weaknesses in the labor market, potentially acting as a negative factor for the DXY. Irrespective of the outcome, the market is likely to experience significant volatility later today.

Furthermore, Federal Reserve Bank of Philadelphia President Patrick Harker is scheduled to discuss employment at an online event hosted by the Federal Reserve. Any remarks about future monetary policy actions could once again influence the US dollar.

Central Bank Notes

The target range for the federal funds rate will be between 5.25% and 5.50%.

The Committee is fully committed to restoring inflation to its 2.0% target.

Monetary policy adjustments will be made if any risks arise that could impede the achievement of the Committee’s goals.

Several factors will be taken into account, including labor market conditions, inflation pressures, inflation expectations, and international and financial developments.

The next meeting is scheduled from 19 to 20 September 2023.

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