MARKET UPDATE

Asia FX edges higher as dollar dips.

Most Asian currencies rose on Tuesday, taking some relief as the dollar retreated from two-month peaks, while government intervention helped the yuan rise despite increasing economic concerns over China.

The dollar index and dollar index futures fell 0.1% in Asian trade, seeing some degree of profit taking this week, after uncertainty over rising U.S. interest rates pushed the currency to a two-month high.

But an overnight spike in U.S. Treasury yields, to over 20-year highs, presented a strong outlook for the greenback, especially as markets grew anxious ahead of the Jackson Hole Symposium later this week.

While most Asian currencies rose on Tuesday, they were still nursing steep losses this year amid persistent concerns over rising U.S. interest rates.

The Japanese yen rose 0.2%, recovering from a near 10-month low to the dollar, while the Australian dollar rose 0.2%, but remained close to a nine-month low.

 

Gold prices creep higher as dollar falls.

Gold prices rose slightly on Tuesday, taking some relief from a weaker dollar as the greenback retreated from two-month highs, although fears of higher U.S. interest rates still kept the outlook for metal markets muted.

The yellow metal saw some signs of recovery after slumping to a five-month low earlier this month. Spot prices also lost the closely-watched $2,000 an ounce level, and were still struggling to break above.

Spot gold rose 0.1% to $1,896.39 an ounce, while gold futures expiring in December rose 0.1% to $1,924.90 an ounce by 00:21 ET (04:21 GMT).

Treasury yields surge ahead of Jackson Hole

But while gold saw some relief on Tuesday, the outlook for the yellow metal was largely dampened by a spike in U.S. Treasury yields.

Focus this week is squarely on an address by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium this Friday. The Fed Chair is expected to provide more cues on the path of monetary policy, with sticky inflation and a tight labor market potentially inviting a hawkish outlook from the central bank.

 

Oil dips on possible easing of tight supply.

Oil edged lower on Tuesday as the market waited to see if Iraqi oil exports resume, which could ease the supply tightness caused by the OPEC+ cut, while a faltering Chinese economy continued to undercut the global demand outlook.

Brent crude was down 8 cents at $84.38 a barrel and U.S. West Texas Intermediate crude was trading 7 cents lower at $80.65 a barrel at 0241 GMT. WTI’s contract with September expiry slipped 8 cents at $80.04 a barrel.

“Crude oil struggled to keep its head above water on signs of supply tightness easing,” said Brian Martin and Daniel Hynes, analysts from ANZ Bank in a note to clients.

Iraq’s oil minister Hayan Abdel-Ghani arrived in the Turkish capital Ankara to discuss several issues including the resumption of oil exports through the Ceyhan oil terminal, a source in the minister’s office told Reuters on Monday.

Turkey halted Iraq’s 450,000 barrels per day (bpd) of exports through the northern Iraq-Turkey pipeline on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC).

More Iraqi crude oil coming on to the market could help alleviate the supply crunch for sour crude as the Organization of the Petroleum Exporting Countries and the allies (OPEC+) prolonged and deepened production cuts.

Meanwhile, gloom over the economic outlook in China, the world’s second biggest oil consumer, continued to pressure oil prices and heighten worries about fuel demand.

 

 

 

 

 

 

 

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