The EIA Oil data failed to provide info on changes in the US inventories for investors, however, a slight increase in inventories allowed the prices to expand rally. Followed by the bullish comments from the central bank executives, hinting on the growing energy demand in the global economy. Meanwhile, the production in the US fell by 100,000 barrels to the joy of OPEC officials, gasoline stocks also declined for the second consecutive week due to the start of the traditional travel season.
The WTI barrel almost reached a two-week high at $45, traded on the London Stock Exchange, Brent unhesitatingly creeps up, consolidating before the three-week resistance level at $48.40. The net position for Black Gold has been declining for three weeks in a row, but this week it is likely to show a reversal, as the belief in global demand and OPEC captures the minds of investors.
Attitude to risk in the global market is quite “friendly” – VIX went below 10 points – a historical record of calm, Gold and the Japanese Yen are being traded in the red zone despite the weakness of the US currency. The yield on bonds in the US went up, along with the chances for a third interest rate increase this year, as FED Chairman Janet Yellen’s talks that the crisis could spark new life into the inflation expectations. The German 10-year bonds, which yield has almost doubled in three days, are also not in demand. The demand growth of the Euro has been promoted by a number of positive economic reports, while the accelerating inflation expectations are pushing future payments on investors to reduce their positions in the European stock market, which is mostly trades in the red zone. The leader of the fall was the French CAC 40. Asian markets, as well as emerging markets, are growing thanks to the Oil pickup, expectations of production activity and consumer demand growth, as well as investors’ desire to take advantage and make some nice bets before the rally.
The Pound Sterling broke through a bearish defence on BoE Governor Mark Carney U-turn, who suddenly decided to join the hawks club, which took shape at the ECB Forum. Defending a soft policy just a week ago, he said on Wednesday that the discussion of raising rates could be on the agenda at the upcoming meeting. By sending mixed signals to the market, Carney becomes the fifth official of the Bank, who saw the need to tighten the policy by allowing the Pound to close eyes to all the risks associated with the Brexit and completely immerse itself in playing out the monetary decisions of the Bank. Particular attention could be paid to the concerns of the business investments, wages and labour costs – the economic drivers. Officials believe that it will outweigh the negative effects of raising the borrowing rates. The British currency was also supported by the growth of mortgage approvals, consumer loans, while the Bulls are considering the conquest of the psychologically important peak of $1.30, and have all the chances providing release of the strong UK confidence figures and further weakening of the Dollar.
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