IC Markets Europe Market Analysis: Asia, Europe, US Session.
IC Markets Europe Market Analysis | Asia Session Recap
The morning of 8th August saw China unveiling its trade balance figures, revealing a trade surplus of 576 billion yuan for the month of July. This marked an increase from the previous month’s surplus of 491 billion yuan. Despite surpassing the estimated surplus of 495 billion yuan for July, the data also indicated a noteworthy 18.8% month-on-month decline in China’s crude oil imports. This drop represents the lowest import level since January, contributing to the buildup of domestic oil inventories. This situation holds implications for global crude prices, given China’s position as the world’s largest oil importer.
Impact on Europe & US Sessions
As the Europe session unfolds, there might be downward pressure on crude oil prices due to the data from China. However, the possibility of a stronger-than-expected drawdown in API (American Petroleum Institute) stockpiles during the latter part of the US session could potentially maintain an upward trajectory for oil prices. The dollar index (DXY), having reached a peak of 102.35 earlier in the day, is currently retracing from this level.
The NFIB Small Business Index has displayed consistent weakness over nearly a year, with small businesses grappling with challenges stemming from inflation and labor shortages. Business owners remain pessimistic about future business conditions and sales prospects. In terms of trade, the US trade deficit contracted to -$69.0 billion in May 2023 from -$74.4 billion in April, driven by declines in both imports and exports. Projections for June suggest a further narrowing of the deficit to -$65.1 billion, which could serve as a positive catalyst for the DXY.
Insights from Central Bank
- The federal funds rate target range has been adjusted to 5.25% to 5.50%.
- The Committee places strong emphasis on restoring inflation to its 2.0% target.
- Monetary policy adjustments will be made if emerging risks hinder goal attainment.
- Decision factors encompass labor market conditions, inflation pressures, expectations, and global financial developments.
- The forthcoming meeting is scheduled for 19 to 20 September 2023.
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