Published Wed, Jun 14 2023 - 5:35 pm
Oil is continuing to rebound today as technicals combined with promising developments in the US and China lift it off its lows. Brent was treading close to its 2023 lows, where it has fallen on a few occasions in recent months prior to this week. Each time it has managed to rebound higher and this time it had the helping hand of a Chinese rate cut and better US inflation data.
Whether that will continue may well depend on what further improvements we see in the data and what policy actions are announced by the PBOC in the coming weeks. We probably can't count on OPEC+ to do anything of significance any time soon after the Saudis were effectively forced to go it alone last week.
US yields are a little lower and the dollar is off around half a percent early in the session on Wall Street which is giving gold a small boost ahead of the Fed decision. The yellow metal has been range-bound over the last four weeks, broadly between $1,940 and $1,980 and the inflation data has failed to change that.
The Fed announcement may have more luck, although I'm not entirely sure there'll be a huge difference between a hawkish pause or a dovish hike, which are the two most likely outcomes. Perhaps the forecasts and Powell's words will be the decisive element of this evening's event.
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