Market Pushes First Rate Hike Into 2022

Saudi Arabia feels sufficiently confident in the outlook for Asia's recovery that it announced it will boost prices next month. Aramco will raise the premium over the benchmark for Arab light by 40 cents to $1.80.The increase is a little more than expected. On the other hand, Aramco announced it was cutting the premium to Europe by 20 cents. The 10-cent cut in the premium on most oil grades sent to the US may say something about the competitive environment.  

The dollar is in a narrow range against the yen (~JPY110.50-JPY110.75) as the market consolidates recent gains. There is an option at JPY111.00 for $460 mln that expires today. The pre-weekend low was a little below JPY110.40. The Australian dollar has fallen in five of the past six weeks but is flattish today, near $0.7620. Resistance is seen around $0.7640, and initial support near $0.7600 has been tested. The offshore yuan is quiet, with mainland markets closed but a touch lower for the third consecutive session. It has fallen for the past two weeks.  

Europe

While France's survey data is holding up better than expected, the government chopped this year's growth forecast to 5% from 6% due to the tighter social restrictions. Macron, well aware of his slump in the opinion polls, wanted to avoid a new nationwide lockdown. The mutations and spreading contagion have proved too much. The French economy contracted by a little more than 8% last year. Maron may have also been assuming funds from the EU. At the end of March, the German constitutional court stepped in to hear a challenge after the EU plan was widely supported in both chambers of parliament. The process is paralyzed for at least the time being, and this means that countries, including France, cannot count on the assistance.  

The UK is about to enter a new phase in combatting the virus. In a speech later today, Prime Minister Johnson will launch a program to encourage everyone in England to take a coronavirus test every two weeks. Free kits will be widely available. Nearly all adults have had at least one jab (31.5 mln). The next phase in lifting social restrictions is set for a week from today. A covid-status certification ("passport) will be developed and could help expedite the re-opening of sporting events, theater, and clubs.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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