Pound Dives After UK Election Upset

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Britain’s pound took a battering dive on Friday, staying at its two-month lows, after Prime Minister Theresa May’s Conservative Party lost its parliamentary majority in elections, plunging the country into potential political chaos days before the start of Brexit negotiations.

Sterling fell 1.6% to $1.2748 after sliding as much as 2.5% to $1.2636 in early European trade , its weakest level since April 18.

With no clear winner emerging from Thursday’s election, Prime Minister Theresa May was fighting to hold on to her job on Friday as she faced calls to quit after her election gamble to win a stronger mandate she had sought to conduct exit talks with the rest of the European Union failed, leaving no single party with a clear claim to power just 10 days before the start of negotiations on Britain’s divorce from the European Union.

Lee, Hardman, a currency strategist in London, said the market wants more clearness now as far as who will be the next Prime Minister, what kind of form will the government take and eventually how all that feeds through into upcoming Brexit negotiations are concerned.

“In the near term the increased political uncertainty and the risk of more disorderly Brexit negotiations should enforce pound weakness.”

The surprise of a result that raised questions about how Britain will go on with its plan to leave the EU, and whether any party can form a stable government, sent the pound to eight-week lows against the dollar and its lowest levels in seven months versus the euro.

After falling sharply on an exit poll released when polls closed at 21:00 GMT, which showed Britain was set for a hung parliament, the pound had steadied a little in Asian trading. However, it fell sharply again as London traders arrived at their desks, as it became clear that no party had won a majority.

Another currency strategist in London, Viraj Patel, said that the pound’s nightmare scenario would always be the failure to have a safe political stability and the result of a hung parliament.

“Hopes that political uncertainty would decrease substantially under a more stable Conservative government…(have) been all but dashed,” said Patel.

“With the two-year Article 50 clock ticking, the passage of time is sterling-negative,” he added, referring to the formal Article 50 process by which Britain is set to leave the EU. “A working government is needed as soon as possible to avoid a further drop in the pound.”

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Oil Prices Rise on Production Cuts, But U.S. Stockpiles Drag

On Thursday, oil prices increased after sharp losses the session before, sustained by strong compliance with touted international production reductions, although an increased in U.S. crude inventories continued to drag.

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On Thursday, oil prices increased after sharp losses the session before, sustained by strong compliance with touted international production reductions, although an increased in U.S. crude inventories continued to drag.

The Organization of the Petroleum Exporting Countries (OPEC) and other oil producers reached a deal the previous year  to reduce production  by nearly 1.8 million barrels per day (bpd) in the first half of 2017, with investors carefully  watching the level of compliance with the landmark agreement.

On Wednesday, Kuwait’s oil minister stated that OPEC’s compliance with the reductions had exceeded targets, standing at 140% in February, while non-OPEC members compliance was 50-60 percent.

International Brent crude futures increased 46 cents, or 0.87%, at $53.57 per barrel at 0342 GMT. They ended the last session down 5% at $53.11 a barrel, hit by a record increased in U.S. inventories.

U.S. benchmark West Texas Intermediate (WTI) crude futures gained 34 cents, or 0.68%, to $50.62 a barrel.  West Texas Intermediate plunged 5.38% to $50.28 per barrel in the prior session, indicating its lowest since December.

The increase in prices on Thursday could be momentary, according  to the report, stated by Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

“One of the factors (pressuring prices) is the strengthening U.S. dollar on U.S. rate hike (expectations),” McCarthy said.

The U.S. dollar index increase on the back of stronger than expected U.S. jobs data and  rising expectations that the Fed Reserve could increase U.S. interest rates the upcoming week. A stronger greenback makes dollar-denominated oil more expensive for importing countries.

United States crude inventories, the world’s top oil consumer, increased last week by 8.2 million barrels, generously beating forecasts of a 2 million barrel build.

“When combined with the huge speculative long positions in the market, it’s not surprising that prices sold off so strongly,” ANZ said in a note. “However, there is increasing talk of extending the OPEC production cut agreement.”

On March 26, Kuwait is scheduled to host a ministerial meeting, attended by both OPEC and non-OPEC members to review compliance with the crude production cuts.

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U.S. Natural Gas Pulls Back from 2 Week Peak

On Tuesday, U.S. natural gas futures declined, pulling back from previous session’s two week peak as traders continued to observe shifting weather forecasts to measure demand for the fuel.

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On Tuesday, U.S. natural gas futures declined, pulling back from previous session’s two week peak as traders continued to observe shifting weather forecasts to measure demand for the fuel.

U.S. natural gas  for April delivery shed 5.3 cents, or approximately 1.8% to $2.848 per million British thermal units by 10:10AM ET (15:10GMT), after reaching $2.952 on Monday, the most since February 16.

Weather forecasts for the next 8 to 15 days indicated that the rain, snow, and cool temperatures will track across the northern and eastern U.S., increasing demand expectations for the heating fuel.

At the same time, the southern half of the U.S. will be warmer than usual as high pressure dominates with highs reaching the 60s to 80s Fahrenheit.

Meanwhile, market participants looked ahead to weekly storage data  scheduled on Thursday, which is anticipated to indicate a draw in a range between 53 and 64 billion cubic feet in the week ended March 3.

Which compares with a build of  7 billion cubic feet in the preceding week, a decrease of 57 billion a year earlier and a five-year average decline of 136 billion cubic feet.

According to the U.S. Energy Information Administration Total natural gas in storage currently stands at 2.363 trillion cubic feet,  7.3% lesser than levels at this time a year ago and 12.5% above the five-year average for this time of year.

The costs of the heating fuel are down approximately 22% so far this year as predictions for warm winter weather influenced on heating demand expectations.

According to the  data from the National Oceanographic and Atmospheric Administration, this year’s extremely warm winter has pushed heating demand for natural gas to approximately 20% below average.

Approximately half of U.S. homes use natural gas for heating.

Without important demand for natural gas, inventories could stay close to record levels and may even continue to drag prices even lower.

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Dollar Steady Gains as U.S. March Rate Hike Seen Near Certain

On Tuesday, the greenback steadied as investors broadly anticipate the Fed Reserve to increase interest rates the approaching week and are waiting for indications on the likely pace of hikes, including this week’s U.S. job data, 12:37AM ET.

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On Tuesday, the greenback steadied as investors broadly anticipate the Fed Reserve to increase interest rates the approaching week and are waiting for indications on the likely pace of hikes, including this week’s U.S. job data, 12:37AM ET.

The dollar index, which gauges  the dollar against a basket of six major peers, last traded at 101.65 (DXY), marking up from a one-week low of 101.22 on Monday.

A Fed policy decision is scheduled at the end of its March 14-15 meeting. On Friday, Fed Chair Janet Yellen stated increasing interest rates this month would be suitable, if jobs and inflation data hold up.

Although a hike next week is “near certain”, investors “are still uncertain if the Fed would increase rates three times this year,” said Takahiko Sasaki, market economist at Mizuho bank.

“Investors can’t take a big move before Friday’s U.S. jobs data and the Fed’s economic projections next week,” said Sasaki.

Concerns over President Donald Trump’s ability to concentrate on his promised economic policies remained after the U.S. leader alleged over the weekend that he was wiretapped by his predecessor, Barack Obama.

Other analysts say that the greenback would not see an additional rally unless Trump announces detailed economic policies.

The euro last stood at $1.0582, still short of its two-week peak of $1.064 touched on Monday.

“Francois Fillon won his party’s backing to be its candidate for French president, hours after a former prime minister Alain Juppe ruled out an election bid,” according to the report.

A poll on Friday had shown that if Juppe replaced Fillon as the center-right candidate, he would likely win the election’s first round, with centrist candidate Emmanuel Macron coming second – a scenario that would knock far-right leader Marine Le Pen out of the race.

Party leaders swung behind Fillon in spite of allegations that he had misused public funds.

The greenback inched up 0.1% against the yen to 113.92 yen after declining to a one-week low of 113.53 yen on Monday as geopolitical doubt prompted investors to purchase the perceived safe-haven Japanese currency.

On Monday, North Korea’s launch of four ballistic missiles had spurred yen-buying.

Markets had a quiet response to a stronger-than-expected U.S. factory orders. New orders for U.S.-made goods surges for a 2nd straight month in January, proposing the recovery of the manufacturing sector was gaining momentum.

The Australian dollar edged higher after the central bank kept interest rates unaffected and indicated no clue of considering another easing, highlighting the outlook for steady policy.

The Reserve Bank of Australia’s (RBA) March policy meeting ended with rates unmoved at 1.5%, as widely projected, and the accompanying statement was generally upbeat.

The Aussie last stood at 0.6% at $0.7621, after fetching $0.7633 on the policy decision.

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Gold Futures Increases in Asia with Copper Eyed on Chile Strike Talk

On Wednesday, gold prices increase in Asia with investors marking political risk and also observing copper on forecasts of strikes by workers in Chile at the world’s biggest miner.

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On Wednesday, gold prices increase in Asia with investors marking political risk and also observing copper on forecasts of strikes by workers in Chile at the world’s biggest miner.

Delivery of gold futures for April on the Comex division of the NYMEX edged up 0.03% to $1,211.75 a troy ounce. Also on the Comex, delivery of  silver futures for March fell 0.15% to $17.517 a troy ounce and copper futures dropped 0.04% to $2.725 even with markets in China, the world’s top importer of the industrial metal, closed through Thursday to mark the Lunar New Year.

While the greenback  staged a slight recovery in Asia on Wednesday with China manufacturing noted, however, attention turning the Fed Reserve statement following the current monetary policy review, though Fed Chair Janet Yellen is not set to hold a press conference.

Copper increased suddenly as union workers at Chile’s Minera Escondida, the largest copper mine in the world, are preparing to vote today on approving a strike as early as Friday after negotiations for a collective agreement seem to have fallen apart, according to reports. Escondida is majority possessed by BHP Billiton, with Rio Tinto holding a minority stake.

China’s official manufacturing Purchasing Managers’ Index (PMI) continued in expansion in January, as the mainland economy presented indication of stabilizing, reaching 51.3, slightly down  from 51.4 in December, but still better than a Reuters poll predicting 51.2. A reading above 50 indicates expansion, while a reading below signals contraction.

Overnight, on Tuesday,  the greenback  held weaker  with remarks on trade from the Trump administration weighing on sentiment and investors looking forward to the current Fed views on rates on Wednesday.

On Tuesday, gold made strong gains on political risk as U.S. trade policies came into focus again and investors were cautious ahead of the latest Fed views on rates scheduled this week.

On Tuesday, in North America, gold prices were sharply higher in the morning trade, extending overnight increased as the greenback  dropped during uncertainty over President Donald Trump’s policies, as the president terminated acting U.S. Attorney General Sally Yates late Monday after she ordered Justice Department lawyers not to implement the travel restrictions.

In the meantime, after Peter Navarro, Trump’s top trade adviser, indicted Germany of currency exploitation, the greenback dropped back toward an eight-week low against a basket of major currencies  The U.S. dollar index dropped 0.82% to 99.60. It recovered slightly in Asian trade.

Traders were now looking forward to the Fed Reserve’s two-day meeting on monetary policy starting on Tuesday for additional clues on the timing of the next U.S. interest rate hike. In January,  CB consumer confidence declines more than anticipated to 111.8, lower than the expected 113.0.

The Fed Reserve indicated the previous month that at least three rate increases were in the near future for 2017. However, traders remained skeptical. Instead, markets are betting  in just two rate hikes during the course of this year, according to the reports.

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Dollar Regains, Sterling Declines as Yellen Speech Expected

After U.S. President-elect Donald Trump stated that the strong dollar was hurting U.S. competitiveness, the dollar decline by 0.6% against a basket of currencies.

Gold Strengthen As Dollar Weakens

After  U.S. President-elect Donald Trump stated that the strong dollar was hurting U.S. competitiveness, the dollar decline by 0.6% against a basket of currencies.

In an interview on Monday Trump stated U.S. companies could not compete with China “because our currency is too strong. And it’s killing us”.

In separate statements, a senior adviser to the U.S. President-elect advised about the threat from a stronger dollar.

However, on Wednesday, as investors expected a speech from Fed Reserve Chair Janet Yellen, the greenback made progress, dragging away from seven week low, although the sterling’s decline, giving back some of the prior session strong improvements.

On Tuesday, Sterling rallied after British Prime Minister Theresa May’s Brexit speech, although the U.S. dollar dropped as investors processed remarks by President-elect Donald Trump.

Previously, Sterling had also received an increase after statistics indicating that U.K. inflation hit the highest since mid-2014 in December.

The U.S. dollar index, which gauges the greenback’s strong point compared to a trade-weighted basket of six major currencies, increase 0.25% to 100.52, moved backward  from Tuesday’s lows of 100.47, the sluggish since December 8.

Compared to the yen, the greenback was higher, with  USD/JPY up 0.51% to 113.17, after declining  to a seven-week low of 112.58.

On Tuesday, San Francisco Fed President John Williams called for slow U.S. interest rate hikes within the next few years.

Investors were looking forward to a speech by the Fed chief  in San Francisco later on Wednesday, which could propose fresh signals on the direction of monetary policy.

On Tuesday, Fed Governor Lael Brainard stated, the Fed might increase rates more forcefully  if deficit expenditure under the Trump administration fueled inflation.

GBP/USD increased 2.66% to 1.2369, recovering from the low of 1.1985 hit on Monday, which was the weakest level since October’s flash crash, after reports said that Prime Minister Theresa May will indicate plans to quit the European Union’s single market to reclaim control of Britain’s borders and laws. It has been the biggest one day increase in the pair since January of 2009, throughout the global financial crisis.

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Oil Bounces Back After Two Days Of Roiling

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After two days of sharp sell-offs, crude oil regained its traction on Wednesday trade. Although this may be considered as good news somehow, investors still remain uncertain if the equilibrium of the supply and demand of global crude can still be restored.

International benchmark West Texas Intermediate futures for February delivery changed hands at $51.17 per barrel which is 35 cents—or 7 percent— in the Globex electronic session on the New York Mercantile Exchange. While Brent crude for March delivery was up 0.8 percent or 39 cents to $54.04 per barrel.

A 6 percent fall in the previous two US trading sessions leading to bargain-hunting was the main driver of the recent buying as analysts see it. With speculations that some OPEC producers that agreed with the deal were still producing way beyond agreed quotas, the contradiction seemed inevitable. Also, others such as Iran were in an aggressive sell-off of inventories.

In a report by the Wall Street Journal Tuesday, Libyan armed forces have penned deals that permit the National Oil Co. (NOC) to revive key infrastructures for petroleum production. This consequently led to a three-year high increase of 708,000 barrels a day in Libya’s production for this week after a fall of below 200,000 barrels a day, a representative of NOC said.

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NOC thinks that it can raise its production higher from its average daily production of 575,000 barrels a day in November during the announcement of the OPEC deal to 900,000 barrels a day this year.

Even if the production cut pledge took effect earlier this month, the market would still have to wait until mid-February when the Organization of the Petroleum Exporting Countries will release its January production data to notice the premature effects of the output curb.

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