Why Property in Switzerland Remains One of Europe’s Most Sought-After Assets?
Dollar in Focus as Dual NFP Report and Global FX Shifts Shape Market Outlook
UK Wage Growth Slows Sharply, Paving the Way for Rate Cuts
Eurozone PMI Signals Resilient Growth Despite Manufacturing Slowdown
Fed Faces Liquidity Pressures as Balance Sheet Freeze Meets Market Ti
Having heard from Michael Stark about stock market, forex, cryptocurrency market and precious metals, it's time to focus on commodities in 2023.
I wouldn't say there's one specific driver. For oil, economic conditions including China's reopening, OPEC+'s behaviour, sanctions on Russia and American production will probably all be roughly as important as each other in affecting sentiment although the first two will likely have the biggest actual effects.
At the moment, sentiment in oil markets doesn't clearly swing one way or the other in terms of the possibly upcoming recession and how severe it might be. Conversely, OPEC+ in general and Saudi Arabia in particular seem to be quite determined to keep prices relatively high, so one might expect more aggressive action from the cartel and its allies if Brent starts moving below $70-75.
This is potentially quite a delicate balance though because if OPEC+ keeps prices too high this would have a knock-on effect on inflation and so monetary policy, which could then make any recession worse that it would've been otherwise. Conversely, if they allow prices to go 'too low' there would be a hit to the economy in many oil-producing countries.
Read next: The early 2023 crypto rally was indeed cut short last Thursday| FXMAG.COM
The EU's sanctions on Russia and any possible new ones in the next few months are unlikely to have a strong effect on the price because Russia can usually find ways to circumvent. Demand in Asia is unlikely to drop and in China specifically it will probably increase over the next few months.
