Energy Prices Inflation and Forex
Crude oil futures reached a record of $70.85 on August 30, a day after Hurricane Katr premiumrebateforexa made l How Forex Rebates Workfall on the Gulf Coast. While prices moderated in the following weeks, it HowForexRebatesWork worth checking the impact of high commodity prices and inflation fears on the foreign exchange market, especially the bestforexrebaterates. cashbackforexreview. cashback forex. Traditional supply and demand factors determine to some extent the long-term trend of energy prices. The supply side of the equation is under pressure this year, focusing on the gradual increase in demand for crude oil from China and India. However, the recent shortfall in crude oil can be largely attributed to hurricane-induced speculation in the futures market and to refining capacity constraints in the United States, where it is concentrated (in the Gulf of Mexico). Economic data released in recent weeks have begun to reflect the impact of Hurricanes Katrina and Rita, which made landfall on the U.S. Gulf Coast in August and September. These reports solidify what government officials have been suggesting; that the economy is growing and inflation, not a recession, is relevant. The September jobs data showed the first net job losses since May 2013, but the disappearance of 35,000 jobs had less impact than expected. September CPI showed the largest monthly gain in 25 years. However, when the food and oil variables are removed, the inflation rate is a very slight 0.1%. It was much less than the market expected and suggested that high energy prices could not last long. Similarly, the September PPI headline number exceeded expectations and was the largest monthly gain in 15 years. However, again subtracting food and energy we can find a manageable 0.3% across the board. This core number beat expectations though, so we might infer that high energy prices are starting to reflect the overall level of prices, and it is only a matter of time before these high prices affect consumers. Weaker than expected retail sales and a 13-year low in consumer confidence suggest that high energy prices do weigh heavily on the perceptions of U.S. consumers. How that will happen over time, especially as retail sales enter their peak season, is the main focus on Wall Street right now. Inflation seems to be on everyones lips these days, and we hope the government continues its austerity program. The government raised its overnight lending target to 3.75% on September 25, the 11th increase since June 2004. Another rate increase is expected in October and another increase of at least 25bp is confirmed in November or December. Raising U.S. interest rates and boosting the U.S. economy have been the driving force behind overseas capital flows into the U.S. and equity markets, respectively. The need to convert this cash into U.S. dollar kept the U.S. currency at a good bid in November and December. While we claim that capital markets are prone to speculation at this time, the interest rate differential chart should continue to favor the dollar through the end of the year. High energy prices and fears of inflation are not the only thing that belong to U.S. central bankers and finance ministers from the G-20 and developing countries meeting in Beijing this month. A statement released on Oct. 16 said that high crude oil prices "could increase inflationary pressures, slow economic growth and lead to a global recession. This sounds good for the U.S. dollar, which is still considered a "safe haven" currency, due to the uncertainty of the global economy. And we may find that other countries are starting to tighten their policies, and U.S. interest rates will remain significantly higher. On the other hand, a new EURUSD July low at 1.1868 would be more convincing for triggering USD-EUR currency gains. This move would be towards the original 1.1759/78 spot in 2004, but could fall below 1.1500. The U.S. dollar has lost ground against commodity currencies during periods of inflationary pressure. A commodity currency is the currency of a country that derives its income from the sale of a large amount of goods for export. The basic examples of commodity currencies are the Canadian dollar, the Australian dollar and the New Zealand dollar. In contrast to the sudden rise in crude oil and metal prices the dollar hit a 17-year low in late September. When the dollar recovers from losses, profits are naturally considered to be corrected and we see that the long-term decline in USD-CAD continues. Similarly, AUS-USD and NZD-USD are consolidating under important resistance levels. In some views, domestic co-inflation and U.S. dollar appreciation will bring the focus to U.S. trade deficits and payment balances. As U.S. goods and services become more expensive, consumers at home and abroad will look elsewhere. Thats where the real damage to the U.S. stock market comes in. The risk of a declining stock market will lead to a positive impact on the flow of cash into the U.S. and keep the U.S. dollar depreciating in the long run. The traditional view of the financial services industry is that placing 5-10% of ones assets in alternative investments, such as CFS Capitals programs, is desirable to accomplish the necessary protection from bad behavior in more traditional asset classes.