MARKET UPDATE

Oil climbs over 1% on drop in Russia exports.

Oil prices rose over 1% in Asian trade on Monday, supported by lower exports from Russia and as attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruption.

Brent crude futures was last up 63 cents, or 0.8%, to $77.18 a barrel by 0730 GMT, while U.S. West Texas Intermediate crude was at $72.04 a barrel, up 61 cents, or 0.9%.

“The bad weather in Russia has played a part in the stronger open this morning as has the Houthis attack on ships close to Yemen,” IG analyst Tony Sycamore said.

Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the world’s biggest exporters try to support global oil prices.

 

Yen holds ground ahead of critical BOJ test.

The yen stood firm on Monday as the Bank of Japan (BOJ) kicked off its two-day monetary policy meeting, with traders awaiting a decision on whether the dovish central bank could finally unwind its ultra-loose policy settings.

In the broader market, the U.S. dollar started the week on the back foot, extending its fall from last week in the wake of the Federal Reserve’s policy meeting which signalled the possibility of interest rate cuts next year.

The Japanese currency has had a volatile few weeks as markets struggle to get a grip on how soon the BOJ could phase out its negative interest rate policy, with comments from Governor Kazuo Ueda this month initially sparking a huge rally in the yen.

That was later reversed on news that a policy shift was unlikely to come as early as December, and investors now await Tuesday’s BOJ decision for further clarity on the bank’s rate outlook.

“The meeting will be relevant and important in terms of what the BOJ does, and there are some in the market that still expect that maybe there’s a surprise,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY).

Against the euro, the yen edged more than 0.2% lower to 155.27, but was not too far from a four-month top of 153.215 per euro hit earlier this month. Sterling was little changed at 180.44 yen.

 

Asia shares subdued for BOJ meeting.

Asia stocks slipped on Monday in a subdued start to a week where Japan’s central bank might edge further away from its uber-easy policies, while a key reading on U.S. inflation is expected to underpin market pricing of interest rate cuts there.

The Bank of Japan (BOJ) meets Tuesday amid much chatter that it is considering how and when to move away from negative interest rates. None of the analysts polled by Reuters expected a definitive move at this meeting, but policy makers might start laying the groundwork for an eventual shift.

April was favoured by 17 of 28 economists as the kick-off for negative rates to be scrapped, making the BOJ one of the few central banks in the world actually tightening.

“Since the last meeting in October 10-year JGB yields have fallen and the yen has appreciated, giving the BOJ little incentive to revise policy at this stage,” said Barclays economist Christian Keller.

“We think the BOJ will wait to confirm the result of the ‘shunto’ wage negotiations next spring, before moving in April.”

Japan’s Nikkei lost 0.7%, weighed in part by a firm yen. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3%.

South Korea’s main index added 0.3%, showing no obvious reaction to reports North Korea had fired a ballistic missile off its east coast.

Chinese blue chips edged down 0.3%, following five straight weeks of falls.

S&P 500 futures inched up 0.3%, while Nasdaq futures added 0.2%. EUROSTOXX 50 futures slipped 0.3% and FTSE futures 0.1%.

Over in the United States, a reading on core personal consumption expenditure (PCE) index is forecast by analysts to rise 0.2% in November with the annual inflation rate slowing to its lowest since mid-2021 at 3.4%.

 

 

 

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