Oil pares gains as Hormuz uncertainty.
Oil prices pared earlier gains on Monday as uncertainty over the reopening of the Strait of Hormuz kept supply concerns elevated, while fresh attacks claimed by Iran-backed Houthi militants against Saudi energy infrastructure added to concerns over regional flows.
As of 01:28 ET (05:28 GMT), Brent Oil Futures rose 0.5% to $83.98 a barrel, while Crude Oil WTI Futures gained 0.3% to $78.44 a barrel, easing from earlier session highs as Brent’s gains over the previous three sessions remained above 5%.
Markets remained focused on efforts to reopen the Strait of Hormuz, with investors weighing signs of progress in negotiations against continued restrictions on shipping through the key waterway. Iranian Foreign Minister Abbas Araghchi said over the weekend that an agreement with Oman to establish a shipping route through the waterway was “very close.”
Dollar edges higher.
The dollar edged higher against major currencies on Monday, while the South Korean won led losses across Asian currencies and the yen weakened after giving back part of its recent intervention-driven gains.
Investors looked ahead to U.S. inflation data for fresh clues on the Federal Reserve’s rate path. The US Dollar Index rose 0.18% to 99.72, hovering near its lowest level since June 2.
Friday’s weak U.S. jobs report reduced expectations for a Federal Reserve rate hike in September. The economy unexpectedly shed jobs in July, while previous months’ payroll gains were revised sharply lower.
Markets now price roughly a 44% chance of a September move, down from 67% a week ago.
Won leads Asian FX losses as dollar firms; yen gives back intervention gains
The USD/KRW pair rose 0.8%, making the won the weakest major Asian currency in early trade.
Higher oil prices added to pressure on the currency, with Brent crude rising toward $84 a barrel as uncertainty over the reopening of the Strait of Hormuz kept energy supply concerns in focus.
Gold holds near 7-week high.
Gold prices edged higher on Monday after hitting seven-week highs in the previous trading session, as investors watched lingering Middle East uncertainty and awaited U.S. inflation figures for clues on the Federal Reserve’s interest-rate path.
Spot gold rose 0.3% to $4,354.51 an ounce as of 03:03 ET (07:03 GMT), while U.S. Gold Futures also inched 0.3% higher to $4,414.40.
Prices hit their highest since June 17 on Friday after data showed the U.S. economy unexpectedly shed jobs in July and previous-month employment gains were sharply revised lower.
The weaker labour-market data prompted markets to sharply scale back expectations for a September Fed rate hike.
Futures markets now see the odds of a hike at the Sept. 15-16 meeting as below even, compared with a greater-than-even chance previously.
Lower interest rates tend to support non-yielding gold by reducing the opportunity cost of holding bullion.
Investors are now awaiting U.S. consumer price data due on Wednesday and producer prices on Thursday, with softer readings potentially strengthening expectations for a less restrictive Fed policy.
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