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May 23. Experts believe that the EU will not be able to replace Russian oil

The topic of the embargo on Russian oil is one of the main topics for discussion on the international market. At the same time, a number of analysts believe that the European Union will not be able to find a replacement for Russian hydrocarbons in the medium term in the event of a ban on oil supplies.

Vagit Alekperov, ex-head of the Russian oil and gas company Lukoil, said that in the event of an embargo, Russia will be forced to reduce oil production and freeze wells, as it was at the beginning of the coronavirus pandemic in 2020. Therefore, a ban on oil from the Russian Federation would be a shock to everyone and the most negative scenario for all parties.

Moreover, it will take years to build a new infrastructure to redirect Russian oil entering the European market today.

Earlier, the European Commissioner for Economics Paolo Gentiloni said that the EU member states currently cannot agree on an embargo on the import of Russian oil – Hungary takes a firm position «against». The country insists on extending the transition period and/or withdrawing the country from restrictions. In addition to Hungary, other countries, including Bulgaria, do not agree with the embargo.

It is worth noting that the introduction of an oil embargo against Russia in the EU has been actively discussed since the beginning of May, but so far the dialogue on this issue has not led to a consensus. In addition, it became known that the embargo on oil from the Russian Federation is not spelled out in the basic scenario of the European Commission's spring economic forecast for 2022-2023.

May 20. Cisco shares collapsed 14% amid China lockdown​​​​​​​

Shares of network equipment maker Cisco fell sharply on Thursday after the release of a forecast for sales in the current quarter. According to the forecast, the indicator fell significantly due to the damage caused to the supply chain by quarantine restrictions in China.

In particular, the company expects a decrease in sales in the fourth quarter of this fiscal year by 1-5% compared to the same period last year. Analysts, on the other hand, had expected growth of 5.9% to $13.9 billion.

As a result, Cisco shares fell 14% to $41.36 (the lowest price since November 2020), and 24 million shares traded on the exchange exceeded the average daily sales volume of 22 million shares during the first hour of trading.

The company said there was solid demand in the third quarter, but sales were hurt by coronavirus restrictions in China, which cut the company's revenue by $300 million, and a Russian special operation in Ukraine, which reduced sales by another $200 million. It’s expected that the quarantine in Shanghai will be lifted on June 1.

Cisco's Q3 adjusted earnings were 87 cents per share on $12.8 billion in revenue. Analysts had expected 86 cents per share on $13.3 billion in revenue.

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May 26. Brent rises after the release of US data on stocks

On Thursday, the oil market is showing a rise after the release of data from the US Department of Energy on crude oil reserves in the country, which showed a decrease in oil and gasoline reserves before the start of the automotive season.

The current Brent quote is $111.60 (the daily maximum is at $111.86 per barrel). WTI oil is trading at $111.11 per barrel.

According to the report of the Ministry of Energy, commercial oil reserves in the United States for the week ended May 20 decreased by 1.02 million barrels to 419.8 million barrels. Experts on average expected a decrease in reserves by 2.13 million barrels. Stocks at the terminal in Cushing decreased by 1.1 million barrels. Oil production remained at 11.9 million barrels.

Gasoline stocks decreased by 482 thousand barrels, distillates – increased by 1.66 million barrels. Analysts expected a reduction in gasoline stocks by 2.13 million barrels and an increase in distillate stocks by 1 million barrels.

Earlier this week, it was also reported that the administration of US President Joe Biden is considering restricting the export of petroleum products from the country to curb the rise in gasoline and diesel fuel prices.

May 25. Russia and Iran switch to settlements in national currencies​​​​​​​

Russia and Iran held a meeting during which the countries agreed to switch to settlements in national currencies and discussed the possibilities of Shetab and Mir payment cards.

The negotiators note that the relevance of the topic of financial and banking relations between countries, as well as the creation of conditions for mutual settlements and payments between legal entities and organizations is a huge step forward.

In addition, the countries discussed swap supplies of oil and gas, as well as increased investments for the implementation of joint oil and gas projects in the republic. According to Russian Deputy Prime Minister Alexander Novak, cooperation between Russia and Iran in the current conditions is becoming one of the most key, including for the transit of goods from the Persian Gulf.

The parties also agreed to accelerate the preparation of an agreement on a free trade zone. Currently, Russia has a free trade agreement with the CIS countries – it was signed on October 18, 2011.

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May 27. Gold shows a downtrend​​​​​​​

Gold quotes settled at $1,855 per troy ounce, which is 11% lower than the maximum value reached on March 8, 2022 ($2,078 per ounce).

Since the beginning of May, prices have fluctuated in the range of $1800 – $1870. Analysts note that this trend is the result of a temporary decrease in the degree of geopolitical tension in the world.

Economists predict that gold prices will average $1880 per ounce this year. At the same time, the main factor influencing the dynamics of precious metal prices will be the tightening of the monetary policy of the US Federal Reserve. And a further increase in the federal funds rate of the US Federal Reserve will help maintain the downward trend in gold quotes.

However, analysts do not rule out a trend reversal. This may happen in the event of a more serious deterioration in geopolitics than the market currently predicts.

It is worth noting that gold often acts as an important protective tool for developed countries. As a rule, wealthy EU citizens try to hedge the risks of financial market volatility and sharply increased inflation through investments in gold ETFs or bullion. Current interest rates are not very attractive and do not give Europeans the opportunity to protect their savings. Moreover, the EU countries are in close proximity to the military events in Ukraine, which also strengthens their motivation to invest in protective assets.

At the same time, the demand for gold in China has decreased. Severe coronavirus restrictions negatively affect the physical ability of the population to purchase precious metals.

Summing up the above, it can be assumed that attempts to stabilize the world economy, tightening the DCP and reducing the influence of the geopolitical factor will lead to a gradual decline in gold prices. However, it is worth remembering that a sufficiently high level of uncertainty in the short-term prospects will currently keep prices from falling sharply.

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May 30. Inflation in Germany accelerated to a record 8.7% in May

According to data from the German Federal Statistical Office Destatis, consumer prices harmonized with EU standards jumped by 8.7% year-on-year in May. This indicator has become a record since the beginning of his calculations. Analysts had expected a more moderate growth of 8%. Inflation in April was fixed at 7.8%.

On a monthly basis, consumer prices increased by 1.1% in May after an increase of 0.7% in April. Experts expected an increase of 0.5%.

Consumer prices calculated only by German standards jumped by 7.9% y/y and 0.9% m/m in May. Analysts had expected growth of 7.6% and 0.5%, respectively.

According to the Destatis report, annual growth has become a record since the winter of 1973-74.

Energy carriers rose the most: the price increase in May amounted to 38.3% in annual terms after an increase of 35.3% in April. Food prices rose by 11.1% (in April – by 8.6%). The growth of prices for services slowed to 2.9% from 3.2%.

May 31. The oil market continues to grow on the sanctions news

Oil quotes continue to follow the upward trend that began last week. Then Brent was trading below the level of $110, while today the current quotation of the commodity asset reached $123.32 per barrel.

North American WTI crude is trading at $119 per barrel, up from $105 last week.

The driver for growth today was the news that the leaders of the EU countries finally agreed on a partial ban on the import of Russian oil. In particular, the participants of the debate agreed to impose an embargo on two-thirds of oil supplied from Russia. At the same time, by the end of the year, the EU hopes to get rid of 90% of Russian raw materials.

The decision to impose not a full, but a partial embargo was a compromise, since not all countries supported the introduction of an import ban. Hungary, which is heavily dependent on energy resources from the Russian Federation, opposed it.

Analysts note that a complete rejection of Russian oil may lead to its rise in price to $ 185 per barrel.

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June 1. Experts: 3 tips for surviving a recession​​​​​​​

As the likelihood of a recession in the United States grows, more economists are pointing out the growing downside risks and offering advice on how to invest during this period.

Many analysts are bearish in their forecasts as the US economy is experiencing multiple shocks today. Among the main risk factors, experts point out the escalation of the conflict in Ukraine, the rise in oil prices to $150 per barrel, the extraordinary strengthening of the dollar, as well as the strongest pressure on companies due to rising costs.

In this difficult period of constant volatility in the market, economists advise the following:

Buying shares in three defensive sectors

Investment bank Morgan Stanley recommends investing in protective sectors: healthcare, utilities and real estate. In healthcare, stocks trade at a discount to the general market. The Bank favors large-cap pharmaceutical and biotechnology stocks as they trade at an attractive price and offer relatively large dividend yields.

The real estate sector grew 42% last year and outperformed the broader US market by 16%. This sector provides stable income and dividends, in particular – protection against inflation through leases, rent increases and rising property values.

The utilities sector provides relative protection against high costs (due to the established pricing structure in utilities) even against the backdrop of the effects of rising energy prices.

Keeping patience

Analysts are sure that during a recession special patience is required when using cash for any investment opportunity. A bear market can last for about a year and sometimes causes a drawdown of around 30%. Therefore, it is also important to diversify investments throughout the period.

Purchase of investment grade bonds

Another recommendation from experts is to buy quality bonds and avoid low-quality or high-yielding bonds.

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June 3. Economists predict the collapse of thousands of digital currencies

The cryptocurrency market today has more than 19 thousand cryptocurrencies and dozens of blockchain platforms, however, a number of cryptocurrency firms suggest that in the coming years many digital tokens will collapse, and the number of blockchains will decrease. Experts predict that in the future there will be only dozens of cryptocurrencies.

Universal attention to the vulnerability of cryptocurrencies was attracted by the recent collapse of the so-called algorithmic stablecoin Terra USD and the associated digital token Luna. The fall of Luna shocked the market, after which many economists began to think more and more about the future and viability of digital currencies.

Web3 Foundation CEO Bertrand Perez drew a parallel between cryptocurrencies and «dotcoms». He believes that the collapse of Terra was one of the consequences of too many blockchains and tokens on the market, which confuses users and involves some risks for them.

Just like at the beginning of the Internet era, when too many «dotcom companies» appeared, many of them were fraudulent and did not bring any value. However, over time, the market «cleared» of them, leaving only useful and legitimate companies. Today, the situation in the crypto market is repeating itself, and many experts agree that most of the cryptomonets will no longer exist in the future. The only question is which ones will stay afloat. A number of analysts believe that only bitcoin and Ethereum will survive.

Currently, the market continues to be under pressure. Bitcoin has fallen by more than 50% compared to its all-time high reached in November ($67,789). The current BTC quote is $30,416. Many other digital currencies have also seriously fallen in price compared to historical peaks.

June 2. US stock market closed in the red on fears of tightening monetary policy

The US stock market closed in the red, although at the beginning of yesterday the trading session began with growth.

The value of the Dow Jones Industrial Average fell by 0.54% to 32,813.23 points. The Standard & Poor's 500 dropped 0.75% to 4101.23 points. The Nasdaq Composite index lost 0.72% to 11,994.46 points.

Surprisingly, the negative factor this time was the strong statistics on manufacturing activity in the country, because, according to experts, it increased the likelihood of a more aggressive tightening of the Fed's monetary policy.

In particular, the index of business activity in the US manufacturing sector in May increased to 56.1 points from April's 55.4 points. Analysts on average expected it to decline to 54.5 points. Tomorrow we should pay attention to the statistics on the American labor market. It is expected that unemployment will decrease in May to 3.5% (from 3.6% in April), and the number of jobs will grow by 325 thousand (after an increase of 406 thousand in April).

Analysts note: «There is some irony in the fact that the pressure on the US stock market may increase if the statistical data indicate the continued active growth of the US economy and raise the yield of government bonds to the highs of the current cycle.»

In addition, on June 1, the Fed began reducing the amount of assets on its balance sheet, which reached $ 9 trillion.

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June 6. Asian stock markets showed growth, pulling European indices along with them​​​​​​​

Stock indices of the Asia-Pacific region (APR) on Monday mainly show growth after the publication of strong statistics on China.

The business activity index (PMI) in China's services sector rose to 41.4 points in May from 36.2 points a month earlier. The composite index in industry and services rose from 37.2 points in April to 42.2 points in May.

As a result, the South Korean index of the Shanghai Stock Exchange Shanghai Composite ended trading up to 3236.37 points, the index of the Shenzhen Stock Exchange Shenzhen Composite rose to 2073.56 points, and the Hong Kong Hang Seng Index rose to 21653.9 points.

Positive statistics on China have improved traders' expectations about the prospects for economic recovery, especially in light of the easing of quarantine restrictions in the country. Following the Asian markets, European stock indexes also started to grow.

In particular, the British FTSE 100 index rose to 7626.28 points, the French CAC 40 – to 6542.73 points, the German DAX – to 14560.11 points.

In addition, European indices are supported by shares of energy companies, which are becoming more expensive against the backdrop of rising oil prices. For example, the securities of Eni, Total Energies, Shell and BP are growing in price by 1.33%, 1.43%, 0.87% and 2.28%, respectively.

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June 7. The yen is trading at a 20-year low to dollar on the softer policy of the Central Bank of Japan​​​​​​​

According to trading data, the Japanese yen is trading at a twenty-year low against the dollar amid a softer monetary policy of the central bank of Japan.

On Tuesday morning, the yen fell against the US dollar to 132.77. Earlier in the course of trading, the Japanese currency fell even lower against the dollar – to the minimum of April 2002.

Economists note that the weakening of the yen against the dollar is due to the rhetoric of the Central Bank of Japan. The regulator intends to maintain the current soft parameters of monetary policy, while the US Federal Reserve makes more «hawkish» decisions on the discount rate.

On the eve of the deputy head of the central bank Masazumi Wakatabe said that it is necessary to patiently continue easing monetary policy, without excluding the possibility of additional easing.

In addition, yesterday, the head of the Bank of Japan, Haruhiko Kuroda, said that the priority for the regulator is to support the economy and commit to maintaining monetary stimulus. He noted that the economic situation in Japan today does not require tightening of monetary policy at all, since the economy is still in the process of recovering from the effects of the pandemic.

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June 8. New obstacles in concluding a deal for Musk's purchase of Twitter​​​​​​​

The uncertainty surrounding the deal to buy Twitter by Elon Musk may lead to the disruption of plans to attract an additional $ 2-3 billion from third-party investors.

At the moment, Musk's attempts to organize new financing of the transaction have been suspended. In total, the entrepreneur planned to invest $ 33.5 billion in the transaction, and to attract the rest (of the total $ 44 billion) from outside investors.

It is clarified that Musk intended to receive additional financing from a group of private investment companies led by Apollo Global Management Inc in exchange for preferred shares of Twitter.

However, back on April 15, Twitter's board of directors adopted a shareholder rights protection plan, which was supposed to prevent an undesirable takeover of the company by Musk. On April 25, the parties still managed to agree on a deal. According to the agreements, Musk will buy Twitter for $ 44 billion ($54.2 per share).

But in May, the conclusion of the deal was again in question: Elon Musk stated his desire to make sure that spam and fake Twitter accounts account for less than 5%. And the day before yesterday, on June 6, Musk accused Twitter that the company refuses to provide this information and thus violates the agreement on the deal.

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June 9. Oil prices continued to rise after reaching highs the day before​​​​​​​

Oil quotes continued to remain stable on Thursday after rising to three-month highs the day before ($124.40). The current price of Brent is $123.41 per barrel.

The market continues to analyze statistical data on the volume of raw materials stocks in the United States and on China's foreign trade for May. The volume of Chinese exports jumped by 16.9% year-on-year last month amid the lifting of many covid restrictions in the country.

Yesterday, the US Department of Energy reported an unexpected increase in oil reserves in the country by 2.02 million barrels to 416.76 million barrels. It is clarified that this is due to an increase in imports to the country to 1.9 million barrels per day (against 0.08 million barrels a week earlier).

At the same time, gasoline reserves decreased by 812 thousand barrels and amounted to 218.18 million barrels. The drop in gasoline stocks was a consequence of the beginning of the automobile season in the United States, when demand for fuel is traditionally high.

Fuel consumption in the country in the reporting week exceeded 20 million barrels per day (and for the same period, these are the highs from the pre-2019 year).

In general, the confirmation of high demand and low inventory levels reinforced investors' confidence in maintaining the deficit and were able to push oil quotes up. Some analysts predict that once fixed above the level of $120 per barrel, oil will be able to go higher – with a target in the area of $130-135 per barrel.

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June 15. Industrial production in China increased by 0.7% in May

According to the data of the National Bureau of Statistics, the volume of industrial production in China in May increased by 0.7% compared to the same month in 2021 against the background of the weakening of quarantine coronavirus measures in the country. Analysts on average expected a decline of 0.7% last month. In April, industrial production in China fell by 2.9%.

In particular, manufacturing output rose 0.1% after falling 4.6% in April. The output of chemical products and raw materials increased by 5%, food products – by 1.6%, communication equipment – by 7.3%. The growth of mining production in May slowed to 7% from 9.5% in April, electricity generation – from 1.5% to 0.2%.

In the first five months of this year, Chinese industrial production increased by 3.3% compared to the same period in 2021.

The National Bureau of Statistics of China also presented statistics on retail sales in May. The decline in sales slowed to 6.7% year-on-year after falling 11.1% in April. Analysts had expected a decrease of 7.1%. It is noted that sales have been declining for the third month in a row amid restrictions to combat a new outbreak of coronavirus. In the period from January to May, retail sales decreased by 1.5%.

Unemployment in China fell to 5.9% in May, compared with 6.1% in April. The target unemployment rate in the country today is 5.5%.

June 14. Bitcoin remains below $23 thousand

On Tuesday, the price of bitcoin continues to remain in the area of local lows: the current price of BTC is $22153. During the day, the cryptocurrency even dropped to $20,834, for the first time since December 2020.

Analysts note that against the background of falling quotations, the capitalization of the cryptocurrency market has fallen below $1 trillion and is now $959.1 billion.

The price of bitcoin has been declining for seven consecutive trading sessions. During all this time, the cryptocurrency has lost about 27% of its value. The strongest decline occurred at the beginning of this week – at the same time there were sales on the world stock markets. Yesterday, for example, the main US stock indexes fell by 2.8-4.7%, and the indices of Asia and Europe today show multidirectional dynamics.

In total, since the beginning of June, bitcoin has fallen in price by more than 28%, in spring its value has dropped by 26%, since the beginning of the year – by half. At the beginning of January, bitcoin cost $ 46.2 thousand.

Economists note that the crypto market is also under pressure after one of the largest multifunctional players in this area, Celsius Network, on Monday suspended the possibility of withdrawing funds due to a liquidity crisis.

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June 16. The Swiss Central Bank raised the rate for the first time in 15 years

Today, the Swiss National Bank (SNB) made an unexpected decision to raise the deposit rate for the first time since September 2007. The rate was raised immediately by 50 basis points, and currently it is minus 0.25% per annum. The previous rate level (minus 0.75% per annum) has been held since 2015.

The regulator noted that the purpose of tightening monetary policy is to prevent the spread of inflation to goods and services in Switzerland. Also, the Central Bank does not exclude the possibility of further rate hikes to stabilize inflation in a range that ensures price stability in the medium term.

After the announcement of the results of the Central Bank meeting, the Swiss franc rate soared against the euro: to 1.0204 euros from 0.9631 euros the day before. Against the US dollar, the franc rose by 1.26% and was trading near 0.982.

June 17. Bitcoin is approaching the $20 thousand mark

Bitcoin continues to demonstrate a persistent «bearish» trend, approaching the main psychological threshold of $20 thousand. The current bitcoin quote paired with the US dollar is $20880.

The pressure on the most popular cryptocurrency continues to be exerted by sales on the world market and the mass withdrawal of investors from risky assets. For example, the Nasdaq index closed more than 4% lower on Thursday, and the S&P 500 fell 3.25%. The Dow Jones index fell below the key threshold of 30,000 points for the first time in more than a year, falling by 2.42%.

The French CAC 40 index ended the day down 2.39%, while the German Dax index fell 3.31%.

Yesterday, European investors were surprised by an unexpected rate hike of 0.50% by the Swiss National Bank. As you know, the central bank of Switzerland is one of the most «dovish» regulators, and the rate was raised for the first time in the last 15 years.

However, despite all the negative factors, analysts also highlight a positive moment in the dynamics of the cryptocurrency – the fact that bitcoin has not yet tested the threshold of $20 thousand. And if the asset manages to return to the $25k area, it could lead to a new upward rally (as at the end of 2020, when BTC rose sharply to a historic high above $60k).

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June 21. The Bank of England urged not to use monetary policy to stabilize the pound​​​​​​​

Hugh Pill, chief economist at the British central Bank, said that the Bank of England should focus its monetary policy on the main goal of controlling inflation, rather than trying to stabilize the exchange rate or economic activity.

Pill also noted that the regulator should pay attention to what is happening in the foreign exchange market and in other central banks, but at the same time realistically assess their capabilities.

«Monetary policy is an inaccurate tool, not a panacea,» the economist stressed.

A day earlier, a member of the Monetary Policy Committee, Catherine Mann, suggested that a more significant increase in interest rates in the short term could compensate for the weakening of the pound caused by inflation.

In December, the Bank of England became the first of the key central banks to raise the cost of borrowing after the pandemic and has since raised the key rate five times, bringing it to 1.25%. Pill suggested that further policy tightening may be required in the coming months, as inflation is approaching 11%.

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June 22. Inflation in the UK has updated the maximum in more than 40 years

According to the Office for National Statistics of the UK, in May consumer prices jumped by 9.1% compared to the same month last year. As a result, inflation in the country accelerated to the highest in more than 40 years. The current indicator coincided with analysts' forecasts.

In April, the annual inflation rate was recorded at 9%.

On a monthly basis, consumer prices in May rose by 0.7% compared to last month after a jump of 2.5% in April. Experts expected an average increase of 0.6%.

Analysts note that the increase in inflationary pressure in the UK is mainly due to higher prices for food and energy, including electricity, gas and gasoline.

Prices excluding food, alcohol, tobacco and energy (core inflation, CPI Core) in May increased by 5.9% in annual terms and by 0.5% monthly. In April, their growth was 6.2% and 0.7%, respectively.

Retail prices (RPI index) soared by 11.7% year-on-year after rising by 11.1% a month earlier. It is worth noting that it is the RPI index that is used by British employers when negotiating salaries.

June 23. The Asian market fell after Powell acknowledged the risk of a recession​​​​​​​

The stock market of the Asia-Pacific region on Thursday morning is mainly reduced. Investors continue to assess the prospects for monetary policy after the head of the US Federal Reserve Jerome Powell acknowledged the risk of a recession.

In particular, the Japanese Nikkei 225 fell to 26.039 points, the South Korean KOSPI fell to 2.314. The Australian ASX 200 fell to 6.425. Hong Kong Hang Seng – to 21.008.

The Chinese Shanghai Composite is growing – up to 3.320.15 points. Shenzhen Component – up to 12.514.73.

Investors’ fears intensified after Jerome Powell said that a recession in the US economy is a very likely outcome. A sharp increase in interest rates can lead to an economic downturn.

At the same time, Powell acknowledged that the rate will continue to rise, but the Open Market Committee (FOMC) is monitoring the incoming data, which implies strict control over the situation, and monetary policy tightening will not be carried out solely on autopilot.

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July 4. Germany records first monthly trade deficit since 1991

The German authorities announced that in May, for the first time in 30 years, a trade deficit of almost €1 billion was formed.

According to the German Federal Statistical Office, in May, against the background of sanctions, the country's exports amounted to €125.8 billion, while imports reached €126.7 billion. For many years, Germany exported more goods than it imported into its territory. Analysts note that this is the first such case in the history of Germany since 1991.

The change in the economic situation in the country began after the start of the military special operation of the Russian Federation on the territory of Ukraine and against the background of Western sanctions imposed in this regard.

After the introduction of restrictions, the trade turnover between Germany and Russia sharply decreased: in March exports decreased by 62%, in April – by another 9.9%. The recovery of indicators was noted only in May – exports increased by 29.4%. At the same time, imports from Russia to Germany continue to decline: in April it fell by 16.4%, in May – by another 9.8% (up to € 3.3 billion). One of the most significant areas in which there has been a reduction is the energy market.

Recall that as part of the package of anti-Russian sanctions, Germany decided to abandon the purchase of oil from the Russian Federation, and now the country is urgently looking for ways to replace Russian gas. However, it is still impossible to completely abandon Russian raw materials: without gas supplies from Russia to Germany, there will be enough for only 1.5 months.

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July 6. The strike in Norway ended after the authorities intervention

The strike of representatives of the oil and gas industry in Norway ended after the intervention of the country's government in the situation. Experts note that if the strike is delayed, gas exports from the country could be reduced by more than half.

The strike was mainly attended by the management staff of offshore platforms – workers demanded higher salaries than the planned level.

As you know, Norway ranks second after Russia in terms of natural gas supplies to the European Union, providing about 25% of its needs. The strike, which began on Tuesday night, has already led to a reduction in daily gas exports from the country by 1%. Analysts estimate that by Saturday the drop would have reached 56%.

Following this, the cost of gas in Europe also jumped, to the highs of March. Prices in the region have risen to record levels, as many power plants run on natural gas.

Yesterday, Norwegian Labor Minister Martin Mies Persen held a meeting with oil companies and employee representatives, after which the union decided to end the strike.

«When a conflict can have such serious social consequences for the whole of Europe, I have no choice but to intervene in the conflict,» Persen said.

The minister also noted that the EU and the UK are completely dependent on the energy partnership with Norway, so it is extremely important to prevent a reduction in gas production.

July 5. Gas prices in Europe may rise to $2000​​​​​​​

Experts suggest that the cost of natural gas in Europe may rise to $2,000 per thousand cubic meters if the strikes of Norwegian employees of oil and gas companies drag on. Norwegian workers have started a strike tonight demanding higher wages.

«If in the very near future the Norwegian Organization of Managers and Managers (Lederne) does not agree with the trade unions to raise workers' salaries, the cost of gas will easily rise to $ 2,000 and above,» the economists note.

Yesterday, gas prices in Europe rose to $1800 per thousand cubic meters in anticipation of strikes, for the first time since the beginning of March. Already today, the cost of «blue fuel» continues to grow: the current price is $1873 per thousand cubic meters of gas.

Experts also note that the situation is worsened by the comments of European politicians that after the planned repair of the Nord Stream, supplies may not resume.

After the strike was announced, the Norwegian oil and gas group Equinor announced that it was suspending production at three fields with a total hydrocarbon production of about 89 thousand barrels of oil equivalent per day, of which 27.5 thousand are natural gas. Tomorrow, the company plans to close three more fields, where 264 thousand barrels of oil equivalent of natural gas are produced per day.

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July 7. What will affect the markets today: July 7, 2022

Last night, the minutes of the US Federal Reserve meeting for June were published. According to the document, another increase in the interest rate by 0.75 percentage points is expected.

The protocol also showed that officials are in favor of a transition to a «restrictive policy» in case of continued increased inflationary pressure. The Fed has already acknowledged the likelihood of a recession in the US economy, but the regulator wants to achieve a «soft landing», which means lower inflation without job cuts. After the publication of the protocol, the shares of technology companies rose, stabilizing the market as a whole.

What other events will be able to influence the dynamics of the market today, July 7?

Applications for unemployment benefits

First, it is worth paying attention to the data on the number of applications for unemployment benefits in the United States. The monthly Non-Farm Payrolls report will be published tomorrow (it is expected that 268 thousand jobs will be created in the economy, which is lower than the May figure of 390 thousand). But first, the States will provide statistics on weekly applications for unemployment benefits. According to the forecast, this number will remain at the level of 230 thousand compared to a week earlier. The number of open vacancies will amount to 11.25 million vacancies, which exceeds the expected 11 million.

Crude oil reserves

The main event of this week was the fall in crude oil prices below the level of $ 100 per barrel. A report from the US Department of Energy on crude oil reserves in the country will be published today. Analysts expect a decline to the level of 1.04 million barrels.

Levi Strauss Earnings

Levi Strauss & Co, a well-known clothing and footwear manufacturer in the United States, is expected to report earnings of 23 cents per share on revenue of $1.4 billion. In addition, bank reporting will begin next week, and Wall Street's attention will be drawn to the business conditions for large lenders (as it assesses the long-term damage from sustained price increases).

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July 8. Germany faces new energy risks​​​​​​​

The energy crisis in Europe continues to develop, reaching unprecedented proportions. First, Russia's military operation in Ukraine dealt a blow to the country's energy and economy, which led to severe disruptions in the supply of raw materials and hydrocarbons to Europe.

An additional risk for the German energy sector is the current shallowing of the Rhine River in Germany. As it’s known, the river supplies coal for thermal power plants and other needs.

The fact that now the water level in the main transport artery is extremely low suggests that barges will not be able to load thermal coal in full. And this will be a strong blow to the utilities of Germany, as they are already facing a shortage of ships.

Experts note that periodically the Rhine shallows, which restricts navigation along the river and forces to reduce the amount of cargo transported. For example, a barge with a capacity of 2500 tons has the ability to take on board only 1600 tons.

The country's energy companies are gradually starting to prepare for winter, but the prolonged drought observed in Germany in recent weeks may lead to delays in the supply of resources.

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July 11. Brent fell to $103.70 per barrel​​​​​​​

Oil prices were actively declining during Monday's trading, reaching a local low at $103.70 per barrel. The pressure on the asset was exerted by news about the increase in the incidence of coronavirus in China. During the day, Brent managed to recover to $106.80 per barrel.

According to official data, 352 new cases of Covid-19 were detected in China on Sunday. As a result, the authorities of several large cities have re-introduced strict restrictive measures in order to prevent the further spread of infection. And this, according to analysts, may lead to a reduction in fuel demand in the world's largest oil importer.

In addition, the focus of the markets this week is the visit of US President Joe Biden to Saudi Arabia. Biden intends to meet with the Crown Prince of the country, as well as with the leaders of other Arab countries, including Egypt, Jordan, Iraq and the United Arab Emirates.

The meeting will address the issue of increasing oil production in the region. However, even if the participants decide to increase production, this will have an extremely insignificant impact on the dynamics of the market, since the reserve capacities of the OPEC states are limited.

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July 12. The Fed's monetary policy may drop Bitcoin to $15 thousand​​​​​​​

Experts suggest that if the Fed continues to keep interest rates at high levels for a long time, most risky assets will be under strong pressure. As a result, the rate of the most popular cryptocurrency, bitcoin, may fall to $15 thousand.

There is an opinion among analysts that the Fed will keep interest rates at high levels for a long time due to fears of a repeat of the situation of the 1970-s, when the fight against inflation was curtailed too early and further price growth got out of control. That is why now the regulator must make sure of the victory over inflation, and only then proceed to change the strategy.

It is also worth noting that the US dollar, being a safe haven currency, still feels confident, despite the fact that the need for its purchases should have disappeared. The reason for this was serious problems in other economies, in particular the eurozone: an increasing number of analysts and market players are confident that a recession is coming – and it is expected that GDP will decline even if Russian gas supplies remain.

If we consider only the cryptocurrency market, then from time to time you can observe rebounds from local lows, but there is no talk of a full-fledged recovery rally yet. The current bitcoin quote is $20,186.

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July 13. The Central Bank of South Korea raised the rate by 50 bp at once​​​​​​​

For the first time in history, the Bank of Korea decided to raise the key rate by 50 basis points at once to combat high inflation. Now the rate is now 2.25% per annum. After the announcement of the regulator's decision, the exchange rate of the South Korean won rose against the US dollar by 0.6%. However, the currency still remains near the lowest in 13 years.

The rate has been increased for the sixth time since August 2021 and the pace of its rise has become the highest since the adoption of the key rates policy by the regulator in 1999. Analysts are confident that the central bank will continue to tighten policy in the coming months.

The chairman of the central bank of the country, Chanyon Ri, said that the non-standard decision on the rate was made unanimously, however, if the inflation curve follows the projected trajectory, further rate increases will be the usual 25 bps.

Inflation in South Korea in June was 6% in annual terms, which was the highest since November 1998. This year, inflation is expected to exceed the previous forecast of 4.5%. At the same time, the regulator presented a worsened forecast for GDP in 2022: it is expected that the rise will be weaker than 2.7%, which were predicted earlier.

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July 19. Bitcoin reached a month-high​​​​​​​

The bitcoin exchange rate has risen to a monthly maximum, and the Coinbase cryptocurrency exchange is suspending its partner program in the United States – these and other news from the world of digital currencies are in our review.

The rate of the most popular cryptocurrency rose to a maximum in a month. The current bitcoin quote is $22,844. On some exchanges, the currency even reached $22,990.

Despite the local growth, analysts believe that the «bearish» cycle observed today may last for about 4 more months. These assumptions are based on a comparison of the current market situation with previous cycles in the history of cryptocurrencies.

Cryptocurrency exchange Coinbase is temporarily closing a program to attract new users in the United States in order to reduce operating costs amid the ongoing crypto winter.

The participants of the affiliate program have received notifications that the program is being closed, and compensation for their costs and commission will no longer be paid.

One of the potential critical hubs of the UAE, against the background of the global growth of Web3 (the decentralized Internet of the future), is launching a project for the development of the metaverse, primarily aimed at artificial intelligence. The aim of the project is to transform the Emirate of Dubai into one of the 10 leading economies of the metaverse in the world.

July 18. Inflation in the eurozone in June reached a record 8.6%

According to the final data of the Statistical Office of the European Union Eurostat, consumer prices in the eurozone increased by 8.6% in annual terms in June. This indicator has become the maximum since the beginning of the data calculation. In May, the indicator was fixed at 8.1%.

The final data coincided with the preliminary ones. Analysts also did not expect a revision of the preliminary estimate.

On a monthly basis, consumer prices increased by 0.8% (as in May).

In particular, the cost of energy resources jumped in price by 42% compared to June last year. Food, alcohol and tobacco rose by 3.7%, industrial goods – by 4.3%, services – by 3.4%. Excluding food and energy, inflation rose by 3.7% y/y and 3.8% m/m last month.

In all EU countries, inflation accelerated to 9.6% y/y in June from 8.8% in May. The lowest inflation in the EU was recorded in Malta (6.1%), France (6.5%) and Finland (8.1%), the highest in Estonia (22%), Lithuania (20.5%) and Latvia (19.2%).

Experts note that inflation exceeds the target of the European Central Bank (2%) by more than four times. The next ECB meeting will be held this Thursday, and it is likely that key interest rates will be raised immediately by 50 basis points, and not by 25 bps, as previously expected.

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July 20. Oil is moderately cheaper in the middle of the week​​​​​​​

Oil quotes are moderately declining on Wednesday after yesterday's growth to the highest since the beginning of July.

On July 18 Brent was trading near $99.65 per barrel, then on the 20th the asset sharply strengthened to $107.60. The current quote is $105.57 per barrel.

North American WTI oil shows similar dynamics: a decline to $98.94 per barrel after rising to a maximum of $100.55. The current WTI quote is $99.10 per barrel.

Fears that the actions of the US administration to combat climate change will negatively affect oil production in the country contributed to the growth of both assets. Yesterday, US President Joe Biden promised to take decisive measures on the part of the executive branch in order to combat climate change and support renewable energy. However, the president did not specify the details, which caused a wave of concerns among market participants.

Previously, the environmental measures of the authorities included reducing the area of territories adapted for oil and gas production.

Today, yesterday's data from the American Petroleum Institute put pressure on Brent and WTI. The report showed that the growth of crude oil reserves in the United States last week amounted to 1.5 million barrels, which was higher than the projected 400 thousand barrels. Today, we should pay attention to similar statistics from the US Department of Energy – if official data confirm the growth of hydrocarbon reserves, oil quotes will continue to decline.

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July 21. The ECB raised the rate by 50 bps at once for the first time in 11 years​​​​​​​

During today's meeting of the European Central Bank, a historic decision was made – for the first time in 11 years, the regulator raised the base interest rate by 50 basis points at once: from 0% to 0.5%. The deposit rate was increased to zero (from minus 0.5%), the rate on short-term loans was increased to 0.75%.

Thus, the regulator intends to fight record inflation, the level of which was 8.6% in June.

A further increase in the ECB's key rate is expected in September. Here you can see the European central bank following the global trend: the Bank of England, for example, has already raised its interest rate 6 times over the past six months. And the key rate of the US Federal Reserve System may reach 3.5% by the end of the year.

At the same time, the ECB understands that a change in the course of monetary policy is associated with the risk of recession against the background of the war in Ukraine.

Additional pressure on the European economy is exerted by the government crisis in Italy: the resignation of Mario Draghi, who previously headed the ECB, led to a drop in the main index of the Milan Stock Exchange. Moreover, due to political uncertainty, the cost of servicing Italy's national debt will increase.

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July 26. Gas prices in Europe jumped above $1,900​​​​​​​

According to the London ICE exchange, gas prices in Europe are rising moderately on Tuesday and are holding above $1,900 per thousand cubic meters.

The cost of «blue fuel» jumped sharply yesterday after Gazprom announced plans to reduce supplies via the key Nord Stream gas pipeline from Russia to Europe. According to the plan, from June 27, the pipeline will pass no more than 33 million cubic meters per day, which is only 20% of the nominal capacity of the main line.

Analysts believe that exchange prices for gas in Europe may exceed $2,000 per thousand cubic meters for the first time in four months. The last time the cost of gas exceeded this mark was in early March – then gas quotes approached the $4,000 mark due to fears of a ban on Russian energy resources.

The estimated gas price on the European stock exchange in July averages $1,742 per thousand cubic meters. This is several times higher than in the same period last year. Experts note that there have not been such consistently high prices in the entire history of the operation of gas hubs in Europe – since 1996.

July 25. Brent fell below $98 per barrel

World oil prices continue the decline, which began at the end of last week. The current Brent quote is $97.66 per barrel.

Pressure on the commodity asset is exerted by traders' concerns about the prospects for economic growth and demand for energy resources in the world in conditions of high economic uncertainty. The fact is that the world's central banks are aimed at curbing the acceleration of inflation, which can lead to a recession.

The focus of the markets in the last trading week of July is the meeting of the US Federal Reserve System, which is likely to be another reminder of the economic difficulties in the country and in the world. The results of the meeting will be published on Wednesday, and most analysts expect another rate hike by 75 basis points, to 2.25-2.5%.

As for demand, analysts believe that oil demand may exceed expectations even in the event of a weakening of the US economy. The fact is that consumption growth in recent years has lagged behind the average level for 40 years due to coronavirus restrictions and should return to normal levels.

In general, despite the local decline, the oil market is likely to continue to grow in the coming weeks, given the beginning of the hurricane season, which may limit production in the Gulf of Mexico. And this traditionally pushes oil prices up.

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July 27. The yuan came under pressure amid problems in the Chinese housing market​​​​​​​

On Wednesday, the Chinese yuan showed a decline against the background of weak demand for loans, which led to a reduction in REPO rates.

Today it became known that short-term REPO rates on the continental market fell below 1% for the first time since January 2021 under the pressure of excessive liquidity and restrained demand for loans.

Analysts note that with very low real interest rates in China, it is possible that the Chinese economy falls into a liquidity trap. And to maintain its growth, additional fiscal stimulus and loosening of the regulation of the real estate market may be required. The traditional easing of monetary policy now is not expected to effectively support economic growth.

Before the market opened, the People's Bank of China set the median rate at 6.7731 yuan per US dollar against 6.7483 yuan on Tuesday.

Additional pressure on the Chinese currency is exerted by the expectation of the outcome of the US Federal Reserve meeting and the rate decision. Investors are also waiting for a telephone conversation between Chinese Leader Xi Jinping and US President Joe Biden scheduled for Thursday.

It is also worth paying attention to the statistics released today: in June, the profit growth of manufacturing companies in China resumed and amounted to 0.8% compared to June last year. In May, the indicator decreased by 6.5%.

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August 8. The oil market remains under pressure​​​​​​​

Yesterday, oil prices again showed a decline in the area of multi-month lows – to the level of $93.20 per barrel. Today, Brent crude managed to recover to the level of $94.25.

Pressure on the oil market continues to be exerted by investors' fears that rising interest rates and a slowdown in the global economic recovery will have a significant negative impact on demand.

The worries of market participants intensified yesterday after the Bank of England decided to raise the base interest rate to 1.75% from 1.25% per annum, at a record pace since 1995. At the same time, the British regulator noted that it expects a decline in the UK economy in the fourth quarter of 2022, and this decline will last throughout 2023.

However, a number of analysts believe that it is too early to say that the world economy is in recession. Moreover, sharp fluctuations in the oil market due to the current global economic conditions make it difficult to forecast a deficit or surplus of production for 2022.

On August 3, OPEC+ decided to increase oil production in September by 100,000 barrels per day, and this decision is aimed at studying the market reaction and may be revised.

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August 9. Oil prices rise on news of limited supplies to Europe

The oil market continues to show an upswing that began during yesterday's trading session. The quotes were supported by the news that Ukraine suspended the pumping of oil from Russia to Hungary, the Czech Republic and Slovakia.

The price of Brent rose from $93.20 per barrel to $98.30 during the day. The current quote of the asset is $97.66 per barrel. WTI grade oil shows similar dynamics: the asset rose from the level of $87.40 to $92.60. The current quote of North American oil is $91.60 per barrel.

The news about the restriction of Russian oil supplies to Europe against the background of the ongoing energy crisis provides significant support to oil prices. Back on August 4, the Ukrainian national company Ukrtransnafta stopped pumping Russian oil through the southern branch of the Druzhba oil pipeline system, since the Russian side cannot make a payment for transit under EU sanctions.

Additional support for oil prices is provided by the depreciation of the US dollar against world currencies. The dollar index declined by 0.37% to 106.04 points.

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August 10. Crypto market news​​​​​​​

Bitcoin has sharply increased in price by $1.000 and exceeded the level of $24.000 after the release of inflation data in the United States. The current BTC quote is $24.077, over the past day the cryptocurrency has risen in price by 3%. The cost of bitcoin increased after the US Department of Labor reported an increase in consumer prices in the country by 8.5% year-on-year in July.

The Coinbase crypto exchange recorded a loss of $1.1 billion in the second quarter. This became known from the company's financial report. Coinbase has suffered due to a sharp decline in trading volumes caused by the collapse of cryptocurrency quotes in recent months. In particular, the price of bitcoin has dropped by almost 70% from the historical maximum set in November 2021.

The developers of the Phantom cryptocurrency service announced the results of an investigation into the hacking of 9230 Solana wallets and the theft of $4.08 million in cryptocurrency that occurred on August 3. The representatives of the project found out that all the affected addresses were related to the Slope mobile application – they were created, imported or used in it. Further investigation is ongoing.

In China, more than 12 thousand accounts in local social networks were blocked, the owners of which promoted and advertised the cryptocurrency. Also, Chinese web platforms have deleted more than 51 thousand posts with illegal advertising of earnings through investing in bitcoin.

The Robinhood cryptocurrency service, by court decision, will pay compensation totaling $9.9 million to all users affected by platform outages in 2020. Then the blocking of traders' operations led to significant losses, as at the same time the financial markets showed record growth results.

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August 11. US stock exchanges continue to rally​​​​​​​

The main US stock indexes opened trading on Thursday with growth, continuing to follow the dynamics of the previous day. The market was supported by data indicating a slowdown in inflation in the United States.

In particular, the Dow Jones Industrial Index (DJIA) rose by 0.79% to 3,3571.43 points, the NASDAQ index of high-tech companies – by 0.98% to 1,2981.20 points, the S&P 500 broad market index – by 0.88% to 4,247.12 points.

Yesterday, the US Department of Labor reported that annual inflation in the country slowed down more than expected by the end of July – from 9.1% to 8.5%. On a monthly basis, consumer prices did not change, while analysts expected them to grow by 0.2%.

Market participants expect that the slowdown in inflation will force the US Federal Reserve System to begin easing monetary policy. According to the survey, 63.5% of analysts expect the regulator to raise its base rate by 50 basis points, although earlier the markets predicted a third increase in a row by 75 bp.

Investors also paid attention to the data on applications for unemployment benefits. Their number has grown to 262 thousand, while analysts expected an increase to 263 thousand. The indicator of the previous week was revised from 260 thousand to 248 thousand applications.

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August 15. The European market is growing at the beginning of the week​​​​​​​

European stock indexes are growing moderately at the beginning of a new trading week. And investors continue to analyze weak statistics on the Chinese economy.

The German DAX index is trading near the values of the previous session (13.786,72). The CAC 40 in France rose 0.2% to 6,533.12 points, and the British FTSE 100 was trading 0.2% higher than the previous close at 7,539.65.

Economic data from China showed that the pace of economic growth in the country unexpectedly slowed in July, which forced the central bank of China to reduce the key lending rate from 3.70% to 2.75%. Industrial production in July increased by 3.8% compared to a year earlier, but the growth rate was lower than the expected 4.6%. Retail sales increased by 2.7% compared to a year earlier, while failing to meet forecasts of 5.0% growth and 3.1% growth observed in June.

In Europe, the European Central Bank raised interest rates by half a point in July and is expected to do the same in September. The tightening of the ECB's monetary policy comes despite the fact that the risk of recession in the eurozone has reached its highest level since November 2020. And all because of record inflation against the background of a shortage of energy carriers.

Corporate news of European companies

Shares of AstraZeneca PLC rose 2.6% after the drugmaker announced that its anti-cancer drug Enhertu slowed the progression of a form of breast cancer in previously treated patients.

Shares of Henkel AG & Co. Stocks rose 0.4% after the German consumer goods company reported that its sales volume increased in the first half of the year, but profits declined due to rising prices for raw materials and logistics.

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August 16. Gold falls on expectations of the next move by the US Federal Reserve

On Tuesday, the price of gold continues to decline moderately – pressure on prices is exerted by expectations of further tightening of monetary policy by the US Federal Reserve.

During yesterday's trading, the precious metal fell from $1818 to $1789 per ounce. The current gold quote is $1791.

Analysts believe that the further dynamics of gold prices will depend on the policy of the US Federal Reserve. Investors expect further growth of the discount rate, which is negative for the precious metal quotes. Tomorrow, the minutes of the July meeting of the US Federal Reserve will be published, which should clarify the issue of how the monetary policy of the regulator will change. If the central bank's rate is raised by 75 basis points in September, gold may continue to fall.

The «hawkish» policy of the American regulator is holding back gold from rising in price, which explains the inability of the asset to gain a foothold at a price above $1800 per ounce. At the same time, some experts say that the process of reducing the rate will not begin even next year.

Additional pressure on gold quotes yesterday was exerted by data from China. According to recent statistics, the country's economic recovery is on the decline, which may lead to a decrease in physical demand for gold from the world's largest consumer.

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August 17. Macroeconomic events of the day | August 17​​​​​​​

New Zealand

The Central bank of New Zealand has introduced a policy to combat high inflation in the country, increasing the interest rate by 0.50 basis points – from 2.5% to 3%. This is the fourth year that the New Zealand central bank has raised interest rates.

Great Britain

Inflation in the UK reached double digits for the first time in 40 years: consumer prices rose by 10.1% in annual terms in July. Analysts note that the last time inflation in the UK was above 10% was in 1982. Compared to June, consumer prices increased by 0.7%. At the same time, economists predicted an increase in annual inflation to 9.8%.

Eurozone

According to the second estimate of the European statistical agency Eurostat, the GDP of 19 eurozone countries in the second quarter of 2022 grew by 3.9% year-on-year and by 0.6% quarter-on-quarter. Analysts expected growth of 4% in annual terms and 0.7% in quarterly terms.

The United States

According to the US Department of Commerce, the volume of retail sales at the end of July remained at the level of the previous month – 0.8%. At the same time, analysts expected sales to increase by an average of 0.1%. On a monthly basis, sales increased by 0.7% (excluding gasoline and car sales from calculations).

Oil

According to the official report of the US Department of Energy, commercial oil reserves in the country decreased by 7,056 million barrels per week after an increase of 5 million a week earlier.

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August 18. UBS: oil prices will recover to $125 this year​​​​​​​

UBS bank experts have presented a forecast according to which the price of Brent oil may recover to the level of $125 per barrel by the end of this year.

Analysts are confident that despite the fact that Brent has declined by 25% since mid-June due to fears of a recession, limited global oil reserves will lead to an increase in hydrocarbon prices. Two months ago, oil quotes were located near the level of $125 per barrel, today Brent is trading at $96 per barrel.

In addition to concerns about a possible recession in the United States and China, oil prices are being pressured by the risks of an increase in oil exports from Russia and OPEC member countries, as well as progress in nuclear negotiations with Iran, which could lead to more oil on the market.

However, despite all these factors, UBS still believes that the current decline in oil prices does not fully take into account the limitation of global supply, and by the end of the year the price will be able to recover to $125 per barrel.

As you know, OPEC and its allies agreed to increase production by only 100 thousand barrels per day in September, which is one of the lowest rates in the history of the organization. According to the alliance itself, the actual increase in production in September will be only one third of the agreed increase in supply volumes.

Moreover, European countries have agreed to reduce imports of crude oil and petroleum products from Russia by almost 3 million barrels per day by the end of 2022. High prices for coal and natural gas will also contribute to the increase in the cost of oil, as utility companies begin to switch from expensive fuels to cheaper ones for electricity production.

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August 18. UBS: oil prices will recover to $125 this year​​​​​​​

UBS bank experts have presented a forecast according to which the price of Brent oil may recover to the level of $125 per barrel by the end of this year.

Analysts are confident that despite the fact that Brent has declined by 25% since mid-June due to fears of a recession, limited global oil reserves will lead to an increase in hydrocarbon prices. Two months ago, oil quotes were located near the level of $125 per barrel, today Brent is trading at $96 per barrel.

In addition to concerns about a possible recession in the United States and China, oil prices are being pressured by the risks of an increase in oil exports from Russia and OPEC member countries, as well as progress in nuclear negotiations with Iran, which could lead to more oil on the market.

However, despite all these factors, UBS still believes that the current decline in oil prices does not fully take into account the limitation of global supply, and by the end of the year the price will be able to recover to $125 per barrel.

As you know, OPEC and its allies agreed to increase production by only 100 thousand barrels per day in September, which is one of the lowest rates in the history of the organization. According to the alliance itself, the actual increase in production in September will be only one third of the agreed increase in supply volumes.

Moreover, European countries have agreed to reduce imports of crude oil and petroleum products from Russia by almost 3 million barrels per day by the end of 2022. High prices for coal and natural gas will also contribute to the increase in the cost of oil, as utility companies begin to switch from expensive fuels to cheaper ones for electricity production.

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August 19. The dollar index rose to highs on the signals of the US Federal Reserve​​​​​​​

On Friday, the US dollar shows strengthening to a one-month high in pairs with major competitor currencies. The dollar index is currently 0.17% higher than Thursday's closing level (107.65); the maximum value of the USDX index was reached on July 18 at 107.72.

The US currency is supported by statements by the heads of the US Federal Reserve on the need for further interest rate increases. Next week, the central bank's symposium will be held in Jackson Hole, and it is expected that representatives of the regulator will give new signals about the dynamics of monetary policy.

Earlier, the president of the Federal Reserve Bank of St. Louis, James Bullard, said that he was leaning towards a third consecutive increase in the key rate by 75 basis points at the Fed meeting in September. His colleague from San Francisco, Mary Daly, also believes that an increase of 50 or 75 points would be quite reasonable. Other representatives of the Federal Reserve are also confident that it is too early to ease monetary policy, since inflation is still at record levels.

Additional support for the dollar was provided by yesterday's data on the labor market in the United States. The number of initial applications for unemployment benefits decreased by 2 thousand from the revised figure of the previous week – to 250 thousand. Unemployment in May remained at the April level of 3.6%, and the number of people employed in non-agricultural sectors of the economy increased by 390 thousand people.

The USD/JPY pair has risen to a maximum since July 28 (136.69) and is preparing for the strongest weekly growth since June 10. EUR/USD is still sideways near the level of 1.0086, and the GBP/USD pair has fallen to a minimum since July 21, 1.1895.

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August 22. Oil prices collapsed amid progress in Iranian talks

Oil prices are falling at the beginning of a new trading week, the current Brent quote is $93.10 per barrel. The daily low was marked at $92.97.

Investors continue to monitor the progress of negotiations between the United States and Iran on the nuclear deal. Last weekend, the next stage of the debate took place, which resulted in the achievement of some progress in the negotiations.

«We may be closer to concluding a deal than it was two weeks ago, but the result remains unpredictable, as some contradictions remain,» a White House spokesman said.

At the meeting, US President Joe Biden discussed with the leaders of France, Germany and the United Kingdom the ongoing negotiations on the nuclear deal and the prospects for the return of Iranian oil to the market in the amount of 1 million barrels per day. The parties also discussed the need to strengthen the support of partners in the Middle East region.

In addition, the market is monitoring the situation in China, where the authorities of Sichuan Province have extended restrictions on the supply of electricity to industrial enterprises to combat power outages. All this negatively affects the activity in the industrial sector of the region.

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August 23. Business activity in the eurozone falls for the second month in a row​​​​​​​

According to preliminary data from the research organization S&P Global, the composite purchasing managers index (PMI) of 19 eurozone countries in August continues to remain below the level of 50 points – the bar separating the growth of business activity from the fall. The indicator decreased from 49.9 points in July to 49.2 points, that is, business activity in the region is falling for the second month in a row.

Nevertheless, the indicator turned out to be higher than the expectations of market participants (49 points).

The indicator of activity in the service sector decreased to 50.2 points (from July 51.2 points), while updating the minimum since April 2021.

The manufacturing PMI fell to 49.7 (from 49.8 points), reaching the lowest value since June 2020.

Germany's composite PMI in August fell to 47.6 points (from 48.1 points), also to the lowest since June 2020. The indicator in the service sector fell to 48.2 (from 49.7 points), while in industry the indicator rose to 49.8 points from 49.3 points a month earlier.

France's composite PMI was 49.8 points compared to July's 51.7 points. The index of business activity in the service sector decreased to 51 from 53.2 points, in the manufacturing industry – to 49 from 49.5 points.

The UK composite PMI in August, although it remained above 50 points, but fell to the lowest since 2021 – 50.9 points from 52.1 points a month earlier. The indicator in the services sector has updated at least in 1.5 years (52.5 points), and in the manufacturing industry – it turned out to be at the lowest level in 27 months (46 points).

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August 24. It will take Germany years to switch to Canadian gas​​​​​​​

German Chancellor Olaf Scholz said that Germany intends to move away from Russian natural gas as soon as possible and switch to Canadian. Earlier, the Prime Minister of Canada has already noted that LNG exports to Germany are possible.

However, despite Canada's willingness to partner with Germany, experts doubt that additional gas shipments may arrive from there in the near future due to the lack of export capacities.

Currently, Canada does not have the infrastructure to export gas abroad – the country is currently only building 2 terminals on the west coast. But it will take at least 3 years to complete the construction of the first terminal, and by that time Europe will have already abandoned Russian fuel. Therefore, it would be more realistic for Germany to turn to countries such as Norway for gas.

Since the introduction of sanctions against Russia, Canada has stated that it has the ability to produce an additional 200,000 barrels of oil and 100,000 barrels of natural gas per day, but due to the lack of infrastructure for export abroad, the vast majority of this fuel is purchased by the United States, which has become the world's largest supplier of LNG.

Before the start of the special operation in Ukraine, Russia supplied 32% of the LNG consumed by Germany. Due to European sanctions, Germany has become one of the countries that have suffered the most due to Europe's rejection of Russian energy resources.

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August 26. Macroeconomic events of the day | August 26​​​​​​​

On Friday, all the attention of the markets is focused on the speech of the head of the US Federal Reserve Jerome Powell at the symposium in Jackson Hole. It is expected that the regulator will confirm its intention to curb inflation, but will not announce the details of its next steps. Many expect an interest rate increase of another 0.75 percentage points in September, while others expect a smaller increase, by half a point.

Powell's speech will take place after the publication of a block of economic data, including on the PCE index, as well as on the expenses and incomes of Americans.

PCE Index

The Personal Consumption Expenditure Index (PCE), the Fed's most preferred inflation indicator, will be published at 12:30 GMT. Analysts expect the underlying PCE to increase by 4.7% compared to last year and by 0.3% compared to the previous month.

Expenses and incomes of Americans

At the same time (12:30), statistics on personal expenses and incomes of Americans will be published. Personal expenses are projected to grow by 0.4% and personal income by 0.6%.

It is noted that middle- and low-income households feel disadvantaged due to rising prices for all basic goods, so they are forced to reduce their expenses. At the same time, retailers are lowering prices to get rid of inventory in preparation for the holiday season.

Powell's performance at Jackson Hole

Despite general expectations, the speech of the head of the Fed is unlikely to bring any specifics to the market. Moreover, before the regulator announces its next decision on the rate, several more important economic data will be published, including inflation and the employment report.

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August 29. Powell's speech provoked the growth of the dollar

On Monday, the US dollar reached a 20-year high against major currency competitors after the speech of the head of the US Federal Reserve Jerome Powell at a symposium in Jackson Hole on Friday. The dollar index peaked at 109.48 points today.

In particular, Asian currencies fell: the Chinese yuan reached a new 2-year low of $6,9321, and the Japanese yen fell to 138.88 against the dollar. The Australian dollar fell to $0.6858, and the New Zealand dollar fell to $0.6109. Paired with the European currency, the dollar rose to $0.9944.

The head of the US regulator said that the Fed does not plan to make «dovish» changes to its rhetoric and intends to further raise the base rate to combat rampant inflation. Powell also warned that the growth of the US economy could be undermined by a rate hike, as households and businesses will inevitably face a number of problems before consumer price growth can be contained.

After the politician's speech, an increasing number of analysts began to predict a rate hike at the September meeting by 75 basis points. The rate is expected to exceed 3% by the end of the year.

Now all the attention of the markets is focused on Friday's report on employment in the United States (Non-Farm Payrolls). A strong report on the labor market may give the Fed additional opportunities to maintain the current pace of monetary policy tightening.

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August 30. Oil prices are recovering moderately after yesterday's fall​​​​​​​

World oil prices are recovering weakly on Tuesday after falling below the level of $100 per barrel. A day earlier, Brent was trading at $103.25 per barrel.

The possible prospects for a reduction in oil supply and a decrease in demand in the markets led to an increase in prices yesterday. Investors' fears intensified after the statement by the Saudi Energy Minister that OPEC may cut production.

At the same time, expectations of an increase in demand appeared after the statement of the famous entrepreneur Elon Musk that humanity may soon need more oil and gas, since without fossil energy carriers «civilization will collapse.»

In addition, the situation in Libya affects the dynamics of the oil market. Over the weekend, clashes between two armed groups took place in Tripoli, as a result of which more than 30 people were killed. This has raised fears that Libya is waiting for another full-scale conflict, as a result of which oil supplies to the world market will be reduced.

Meanwhile, the volume of production in the country remains at the same level of 1.2 million barrels per day, as reported by the state-owned Libyan oil company National Oil Corp.

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August 31. Inflation in the eurozone in August reached a record 9.1%​​​​​​​

According to the Statistical Office of the European Union, consumer prices in the eurozone increased by 9.1% in annual terms in August. In July, the price increase was 8.9%, so inflation accelerated again and updated the maximum since the beginning of calculations.

The fresh indicator exceeded the forecasts of analysts who expected less significant growth – by 9%. Inflation exceeds the European Central Bank's target of 2% by more than four times.

The CPI index (consumer prices excluding food and energy) in August increased by 4.3% year-on-year compared with 4% in July.

Energy resources increased in price by 38.3% compared to August last year, but the growth rate slowed down slightly compared to the rise of 39.6% a month earlier. Food, alcohol and tobacco rose by 10.6% (by 9.8% in July), industrial goods – by 5% (by 4.5%), services – by 3.8% (by 3.7%).

On a monthly basis, consumer prices increased by 0.5% in August. In July, this indicator increased by 0.1%.

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September 5. The pound has collapsed to its lowest since 1985​​​​​​​

On Monday, the British pound collapsed to its lowest since 1985. At the moment, the exchange rate of the GBP/USD currency pair fell to the level of $ 1.1444, losing 0.55%.

The main pressure on the pound sterling is exerted by the current strengthening of the US dollar, as well as the economic situation in the UK itself. Analysts fear that due to the energy crisis in the country, many households will not be able to pay bills in winter.

In addition, doubts about the ability of the Bank of England to cope with record inflation are another factor for the weakening of the British currency. Experts expect that inflation in the UK will reach 22% next year due to an increase in the cost of energy resources, which could lead to a fall in the economy by 3.4%.

Additional pressure on the pound is exerted by uncertainty about the economic policy of the new British Prime Minister Liz Truss. Today it became known that Truss, the British Foreign Minister, was elected head of the Conservative Party and prime Minister of the country. Truss scored 81.3 thousand votes, thus overtaking ex-Finance Minister Rishi Sunak, for whom 60.4 thousand people voted.

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September 6. The pound is growing on the promises of the new British Prime Minister​​​​​​​

The British pound is rising on Tuesday after the publication of more detailed information about how Liz Truss, who became the new prime minister of Britain, intends to deal with the energy crisis in the country.

It is reported that in October, electricity and heating tariffs for households were supposed to be increased by 80%, but Truss promised that she was going to freeze tariffs for this winter. And this may cost the country's budget more than the employment support program during the pandemic.

As a result, the British pound managed to move away from the lows of 1985, which the currency approached during yesterday's trading ($ 1.1444 per 1 pound). The current quote of the GBP/USD pair is $1,1609. At the same time, analysts note that the pound continues to remain near the lows for 2.5 years amid concerns about the price that the UK will have to pay for the support of the population.

It is worth noting that the country's public debt has already grown to almost 100% of GDP from 80% before the pandemic. In general, during the pandemic, sterling declined against the US dollar by 15%, the annual inflation rate exceeded 10%, and economic growth almost stopped.

During her election campaign, Truss hinted at lower taxes, which led to a decline in UK government bonds. In August, the drop in their prices was the deepest in several decades, because investors feared a balance of payments crisis.

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September 7. Macroeconomic events of the day | September 7​​​​​​​

The US stock market is declining on Wednesday after the end of the Labor Day holiday weekend. Investors are waiting for new economic data and comments from representatives of the US Federal Reserve System this week.

The next Fed meeting will take place only at the end of the month, but some Fed officials are expected to speak this week, including Jerome Powell. The Fed's Beige Book (economic summaries of regional banks) will be published today.

Market participants expect that the US regulator will continue to raise the rate by another 0.75 percentage points to combat high inflation.

What should I pay attention to today:

The Fed's beige book.

The periodic report of 12 regional banks of the Federal Reserve will give an idea of what is happening in manufacturing, services and other business sectors, as well as consumer behavior. The beige book will be published at 18:00 GMT.

The decision of the Bank of Canada on the rate

Another interesting event of the day will be the meeting of the Board of the Bank of Canada. The regulator is expected to raise the refinancing rate from 2.5% to 3.25%. Such a sharp increase could lead to a steady increase in the Canadian dollar.

Eurozone GDP

Gross domestic product in the eurozone increased by 0.8% in the second quarter of 2022, which exceeded the growth of 0.6% according to the second estimate and was the highest growth rate in three quarters. Despite the current growth, the energy crisis in Europe continues to cause alarm, as the region is cut off from a key natural gas pipeline just a few weeks before the onset of cold weather.

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September 8. Truss will freeze gas and electricity bills for two years​​​​​​​

The new British Prime Minister Liz Truss has revealed the details of her energy plan: from October 1 and for two years, energy prices will be frozen. Now the average annual gas and electricity bill will not exceed 2,500 pounds.

The envisaged measures will cost the UK budget about 150 billion pounds ($172 billion). At the same time, Trass has not yet announced exactly how this assistance program will be funded.

Given that the new Prime Minister is actively in favor of reducing taxes on the population and has repeatedly spoken out against the introduction of a tax on excess profits of companies, it can be assumed that covering the difference between real energy prices and the amount that will be charged to citizens will be at the expense of government loans. In the future, they will be paid over the next 10-20 years by adding to consumers' energy bills.

According to Truss, the new measures will save each household a thousand pounds. The country already has support measures in the form of a discount on energy bills in the amount of 400 pounds this winter, which was announced under the previous British Prime Minister Boris Johnson.

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September 9. The London Stock Exchange stopped trading after the death of Elizabeth II

Last night, the London Stock Exchange stopped trading after the news of the death of Queen Elizabeth II appeared. Trading should recover on September 9. In addition, the country's parliament, the government, as well as the legislative bodies of Scotland, Wales and Northern Ireland have also suspended their work.

Queen Elizabeth II of Great Britain has died at the age of 96, according to Buckingham Palace. Elizabeth became Queen in 1952, and this year she celebrated the 70th anniversary of her reign, the longest in the history of the country.

The new king of the country was the son of Elizabeth II, 74-year-old Prince Charles. The new British monarch will rule under the name Charles III.

The Bank of England announced that banknotes with the image of Elizabeth II will remain legal tender.

The British pound reacted to the news of the Queen's death by rising to the level of 1.1609. A little earlier, on the news about the deterioration of the Queen's physical condition, the British FTSE 100 index also started to grow, to the level of 7,382.60.

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September 12. Economic events of the day | Great Britain

Monday started with a block of data from the UK – on the country's GDP and industrial production.

According to the country's national bureau of Statistics, the British economy grew by 0.2% in July, while analysts had forecast growth of 0.4%. It is noted that such a decrease was the result of a reduction in energy generation as a result of tariff increases in the country. In June, the UK economy shrank by 0.6%.

The volume of industrial production in July decreased by 0.3% compared to June. Analysts believed that the indicator would increase by 0.4%. In annual terms, industrial production increased by 1.1%, while experts expected an increase of 1.9%.

In June, industrial production decreased by 0.9% on a monthly basis, and increased by 2.4% on an annual basis.

In August, the Bank of England predicted that a recession would begin in the British economy at the end of this year, which would last until the beginning of 2024. Last week, the new Prime Minister of Great Britain, Liz Truss, announced a massive program of support for the population, promising to limit electricity and heating tariffs. It is reported that this program will cost the country's budget 100 billion pounds or more, which will further worsen its condition.

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September 13. Gold declines after the release of US inflation data​​​​​​​

The price of gold fell sharply on Tuesday after the publication of inflation statistics in the United States. Annual inflation in the country decreased to 8.3% in August after 8.5% in July. Analysts predicted an even bigger decline – up to 8.1%. The fact that the current indicator fell short of forecasts caused expectations of an even tougher approach of the US Federal Reserve System to monetary policy.

The daily minimum price for December gold futures was $1,706.95; the asset collapsed from the level of $1,742.75 per ounce. December silver futures are down 1.05% to $19.652 per ounce.

Analysts note that additional tightening of monetary policy in the United States will be positive for the dollar and the yield of the US government debt and negative, respectively, for commodities and assets used as a «safe haven». According to experts, 82% of analysts already expect the Fed's discount rate to increase by 0.75 percentage points, to 3-3.25% per annum.

Analysts are also confident that a rate hike in September is already a settled issue. Moreover, in November, the rate cut will most likely not happen.

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September 14. Oil declines on U.S. inventory data​​​​​​​

World oil prices are declining on Wednesday morning amid a significant increase in its reserves in the United States.

According to the American Petroleum Institute (API), commercial oil reserves in the country unexpectedly jumped by 6 million barrels. At the same time, analysts expected a decrease of 200 thousand.

The publication of the IEA report and statistics from the Ministry of Energy of the country is expected this evening. If the official report confirms the growth of reserves, oil quotes will continue their decline.

On Wednesday morning, Brent quotes are near the level of $92.50 per barrel, having declined from the area of $93.80. The cost of North American WTI oil hovers at $87 per barrel.

In addition to the data on reserves, the upcoming speech by the President of the European Commission, Ursula von der Leyen, who is going to present a number of proposals to contain the oil crisis in her speech to the European Parliament, may have an impact on the dynamics of the market.

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September 15. Ethereum has completed a long-awaited upgrade to its system​​​​​​​

Ethereum has completed an important long-awaited upgrade to its system – The Merge. It involves the transition of the altcoin from the Proof-of-Work protocol to Proof-of-Stake (PoS). This means that now the security of the blockchain will be provided not by miners, but by validators – users who have deposited and blocked their share of coins (stacking).

The main purpose of the update is to reduce the problems associated with the growth of the users number. The hard fork is aimed at increasing the speed, efficiency and scalability of the cryptocurrency network so that it can process more transactions and provide a higher level of protection.

The Merge has been in preparation for six years, and many consider it an important milestone in the history of cryptocurrency due to the potential material and ideological consequences. The update should show that a decentralized and public network can work in the most energy efficient way.

In addition, the transition to a new environmentally friendly Proof-of-Stake model will lead to a reduction in the impact on the environment. The new protocol will consume 99.95% less energy than the current mining model. Moreover, the transition of Ethereum to the Proof-of-Stake concept does not involve the use of video cards for mining. And this will lead to a further reduction in prices for graphics accelerators.

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September 19. Bitcoin is aiming for 2020 lows

During Monday's trading, the bitcoin exchange rate dropped to $18,313 for the first time since the end of 2020. Pressure on the cryptocurrency is exerted by investors' withdrawal from risks before the meeting of the US Federal Reserve System scheduled for Wednesday.

Most analysts expect that the US regulator will raise the base interest rate by 75 basis points for the third time in a row, or even by 100 bp at once.

The current quote of the BTC/USD pair is $18,756.90. Since the beginning of this year, bitcoin has fallen in price by 60% and is currently trading at the level of December 2020.

In the current conditions, risk appetite remains extremely weak, and the entire crypto market is showing a decline following the fall of stock markets. Additional pressure on the market is being exerted by signals that the administration of US President Joe Biden plans to tighten regulation of the cryptocurrency industry.

It's not just bitcoin that is falling today. The cost of the second most popular cryptocurrency, Ethereum, is also declining and is at its lowest level since July. The current price of ether is $1,280. Last week, an update of the cryptocurrency software, called The Merge, was carried out on the Ethereum network. This update has transferred the ether blockchain to a new algorithm, which will dramatically reduce electricity consumption during mining.

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September 22. The Bank of England raised the rate by 50 basis points to 2.25%​​​​​​​

Following the results of the September meeting, the Bank of England decided to raise the base interest rate from 1.75% to 2.25% per annum. This decision completely coincided with analysts' expectations.

Thus, the rate in the UK has reached its maximum since 2008. Experts note that the rate was raised following the results of the seventh meeting in a row, and the second meeting in a row the increase was 50 basis points.

All nine members of the Monetary Policy Committee (MPC) voted unanimously for the rate increase. Moreover, five were in favor of a 50 bps rise, three were in favor of a 75 bps increase, and one voted for a 25 bps increase.

In addition, the leadership of the British regulator voted to begin reducing the volume of government bonds on the balance sheet of the central bank. Now the volume of government bonds at the disposal of the Bank of England will be reduced by 80 billion pounds over the next 12 months and will reach 758 billion pounds.

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September 23. Gold prices fell to a 2-year low​​​​​​​

According to trading data, gold prices have fallen to the lowest levels in more than two years. December gold futures on the New York Mercantile Exchange COMEX collapsed from the level of 1.682 to 1.648.60 per ounce. The last time gold was traded at such levels was in April 2020.

Analysts note that the precious metal quotes are declining for the second week in a row after many central banks around the world raised interest rates to curb inflation.

In particular, the US Federal Reserve, as well as the Central Banks of Switzerland, Norway and the UK announced an increase in interest rates to curb price growth. And as we know, gold, which is traded in the US currency and does not bring any guaranteed interest income, usually has a negative correlation with the dollar exchange rate and rates.

Experts suggest that the negative dynamics in the gold market is very likely to continue due to further tightening of monetary policy by some major central banks. Because against the background of higher rates, the costs of owning gold are growing.

At the same time, fears of a recession and any escalation of the conflict in Eastern Europe may support the prices of the precious metal.

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September 26. The yield of 10-year British government securities rose to the highest since 2008

Yields of British government securities are rising at the beginning of a new trading week: on Monday, the yield of ten-year bonds rose to 4.246% compared with 3.827% at the close of the market on September 23, which was the highest since 2008. The yield on two-year government securities rose to 4.418% from 3.911%.

The growth is supported by expectations that the Bank of England will have to sharply raise the rate, as the large tax incentives announced by the government last week will inevitably lead to a further increase in inflation.

On September 23, British Finance Minister Quasi Kwarteng announced a large-scale tax cut that will affect individuals and legal entities. It is expected that these measures will increase the budget deficit in the current financial year by more than 70 billion pounds. At the same time, the minister clarified that he does not exclude further tax breaks.

The stimulus measures of the new UK government will require an increase in the issuance of government bonds, which is one of the factors pushing down their value.

Market participants expect the Bank of England to raise the base rate by 100 basis points at the November meeting. However, there is an opinion that the Central Bank may raise the rate until November, in an attempt to contain the fall in the national currency. An increase in interest rates may exacerbate difficulties in the economy, since the tightening of monetary policy reduces the disposable incomes of the population and leads to an increase in the cost of mortgages.

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September 27. Iraq: oil may rise to $150 per barrel​​​​​​​

The price of oil on the world market may reach $150 per barrel in the coming months. This was stated by Iraqi Foreign Minister Fuad Hussein in an interview on the sidelines of the UN General Assembly.

And there are significant risks here: if oil prices rise in winter, it will hit the economies of countries that do not produce oil. In addition to the seasonal factor of rising prices for hydrocarbons, the Iranian politician noted the impact of anti-Russian sanctions on the cost of oil.

On Tuesday, the commodity asset is steadily growing after yesterday's fall to the level of $82.46: the current Brent quote is $85.54 per barrel. The driver of growth is concerns due to a reduction in supply on the market.

Also, traders continue to monitor the gathering strength of Hurricane Jan in the Gulf of Mexico. Chevron Corp has already announced the suspension of the operation of two production platforms, the total production volume of which is about 120 thousand barrels per day. British BP also intends to close two platforms in the region, the production volumes at each of which exceed 100 thousand barrels per day.

In addition, the decision of the OPEC+ countries to reduce the volume of oil production, as previously repeatedly stated by representatives of the alliance, can support oil prices. In particular, in order to maintain prices at $90 per barrel, OPEC will need to reduce production by 1 million b/d. In the meantime, the organization can reduce production by at least 500 thousand b/s.

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October 3. The pound rose sharply after the British authorities rejected the budget plan​​​​​​​

The pound jumped sharply on Monday after the British government announced the cancellation of a plan to reduce taxes for the rich, which was a shock to the market and scared investors.

British Finance Minister Kwasi Kwarteng said today that the government is ready to abandon the plan to abolish the 45% maximum income tax rate. Against this background, the pound reached $ 1.1263 in a pair with the US dollar.

Last Monday, the British currency fell to a record low of 1.0356. Investors were scared by the fact that tax cuts would spur inflation and lead to an even faster increase in the interest rate. And this will undermine the already struggling UK economy.

Several members of the ruling Conservative Party also opposed the tax reduction program. Citizens themselves also spoke out against it, judging by the results of public opinion polls.

Earlier, the International Monetary Fund also sharply criticized the new fiscal package, which includes the rejection of the planned increase in the social security tax rate and a reduction in the tax on the purchase of real estate below 250 thousand pounds. Representatives of the IMF said that this would contradict the tightening of the monetary policy of the Bank of England.

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October 4. The Reserve Bank of Australia raised the base rate by only 25 bps​​​​​​​

The Reserve Bank of Australia (RBA) unexpectedly reduced the pace of tightening its monetary policy, noting a deterioration in the global economic outlook. This time, the regulator raised the interest rate by only 25 basis points, to 2.6%. Most analysts expected an increase of 50 bps.

Recall that the RBA raised the rate by 50 bps in June, July, August and September in an attempt to slow down inflation, which may peak by the end of 2022 at about 8%.

«One of the sources of uncertainty is the prospects for the global economy, which have worsened recently,» said the head of the Australian Central Bank, Philip Lowe.

In addition, the RBA fears that the tightening of financial conditions will have negative consequences for consumer budgets and spending.

Earlier, the Australian central bank has already stated that it intends to slow down the pace of rate hikes at some point, as it expects a rapid weakening of inflation in 2023 along with falling commodity prices.

The Australian dollar reacted with a decline to the news about the rate: the AUD/USD pair fell to $0.6470 during trading on Tuesday, compared with $0.6514 at the close of the previous session.

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October 6. Oil rose above the level of $94 per barrel​​​​​​​

Oil quotes on Thursday remain in the area of local highs reached after the announcement of the results of yesterday's meeting of OPEC+ ministers.

The organization decided to reduce quotas for oil production in November by 2 million b/s. Analysts note that this decision signals that Saudi Arabia and the alliance as a whole are striving to stabilize and support oil markets.

At the same time, it is noted that the actual decline in production will be less, since at the moment OPEC+ lags behind the maximum permitted production levels by about 3.6 million b/s. About 1.2 million b/d of the total under–production is accounted for by OPEC countries, and 2.4 million – by OPEC+ countries.

Yesterday, after the end of the ministerial meeting, Brent jumped to the level of $93.90 per barrel. Today, the asset continued to grow and reached $94.44 per barrel. The last time such price values were observed was in mid-September.

Additional support for the oil market was provided by data on fuel reserves in the United States. According to the Ministry of Energy of the country, commercial oil reserves decreased by 1.36 million barrels last week, while analysts predicted an increase of 1.8 million barrels.

Gasoline stocks decreased by 4.73 million barrels, distillate stocks – by 3.44 million barrels. Analysts expected a decrease in gasoline stocks by 1.1 million barrels and a drop in distillate stocks by 1.5 million barrels.

October 5. The New Zealand central bank raised its key rate to a seven-year high

The Reserve Bank of New Zealand (RBNZ) has raised interest rates by 50 basis points to a seven-year high of 3.5%. The regulator also announced its readiness to further raise the rate in an attempt to contain stubbornly high inflation.

The central bank's decision coincided with analysts' forecasts. The current increase was the eighth since the beginning of the monetary policy tightening cycle, which started a year ago. RBNZ accelerated the step from 25 to 50 points in April and has now brought the rate level to the cyclical highs of 2014-2015.

It also became known that the monetary policy committee discussed an increase even by 75 bps, but eventually stopped at half a point.

«It remains appropriate to continue tightening monetary policy at the same pace to maintain price stability and ensure maximum employment,» said the representative of the regulator.

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