Oil slideBy Vincent-Frédéric Mivelaz
Crude oil prices rose on Friday, after OPEC said it will reduce exports in August. Brent crude and West Texas Intermediate (WTI) closed the week at USD 73.07 and 70.46 per barrel. However, the trend has reversed: crude is on track for a third weekly loss. WTI is trading at 68.14, approaching 67.95. Brent futures in Europe and Shanghai Crude trade at USD 73.05 and CNY 491.70, heading toward USD 73.25 and CNY 495.
As G20 Finance Ministers warn of dampened global growth due to tariffs from both the USA and China, fears of lower oil demand arise. The US oil rig count took its biggest hit since March 2018. Trading below the highs of June, both oil benchmarks as well as other commodity prices are expected to be driven by geopolitics, which is overshadowed by US President Trump’s threats towards Iran and of tariffs on all USD 500 billion of Chinese imports.
Yen up as Japan re-thinks QE bond buyingBy Arnaud Masset
Within the G10 complex, the Japanese yen rose the most with USD/JPY easing to 110.75, the lowest level since 11 July. Over the last two days, the yen appreciated more than 2% amid rumours that the Bank of Japan is considering modifications to quantitative easing programme. USD/JPY bounced back from the 110.77 and consolidated around 111. On the downside, the low from 4 July (110.28) will act as next support. The Swiss franc also resisted as USD/CHF slid to 0.9915.
Investors continue to focus on trade war developments. US President Donald Trump did not just sit around over the weekend. He showed no sign of backing down in his trade rhetoric with China and Europe. He responded aggressively to Iranian President Rouhani in an all-caps tweet. Market participants appeared not too concerned: they are used to Trump’s exaggerations. Last summer he promised “fire and fury” to North Korea: a year later Kim and Donald are best friends and North Korea has not shut down nuclear production.