FOREX
The US dollar started the week on the back foot, losing ground to other major currencies and approaching December’s lows. Investors have started pricing in a less aggressive stance from the Federal Reserve, following the release of jobs numbers on Friday that showed that, albeit unhurriedly, the US economy is starting to slow down. This cooling down is particularly noticeable in hourly earnings, which rose less than expected. Against this background, the consensus is that when the Fed next meets in February it will decide on a 25 basis points rate hike, rather than the 50 or 75 bp delivered at each of the last six meetings. This is scenario that is bearish for the US dollar, especially considering the improvement in risk appetite, following the reopening of China, which has also dimmed the greenback’s haven appeal.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
OIL
Brent oil prices rose during early European trading. The reopening of the Chinese economy is playing an important role in the change of outlook for oil demand, which is now expected to recover. At the same time, the end of the zero-covid policy mitigates fears of a serious global recession, while the dollar is expected to weaken further, weighed by expectations of a less aggressive Federal Reserve. With the outlook for oil demand improving, and the dollar weakening, there may be scope for further increases in the price of the barrel.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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