Some time ago we had a great opportunity to ask FXStreet to comment on commodities, American consumers and NFP. Here’s what we’ve heard from Yohay Elam.
Brent crude oil nears $80 at the actual start of heating season, is China's covid situation affecting it to that extent or there's another 'hidden' factor and what can we expect till the end of the year?
Yohay Elam (FXStreet): Fears of a US recession have been weighing on energy prices, but I see several reasons for a significant bounce. First, China's reopening is far from being fully priced in markets. Beijing is relaxing its draconian measures and at a dizzying pace, and higher demand expectations are set to boost demand. Second, Current low prices may boost the US government's purchase of crude to replenish its strategic reserves, which it has been depleting to mitigate the impact of Russia's war in Ukraine. Third, supply remains tight as a result of under-investment in recent years. Fourth, and as mentioned in the question, winter has arrived, and with it higher demand for energy. All in all, I see prices rising from the current abyss.
Could NFP save the dollar from a quite long downtrend? Dollar index has been losing since ca. 7 weeks, is correction coming to USD?
The robust Nonfarm Payrolls report – and especially the upbeat wages data – helped stabilize the Dollar but do not serve as a game-changer. The #1 market mover in recent months has been the CPI report, and the next one is due shortly. If Core CPI rises by 0.6% or more, it would trigger a massive turnaround in favor of the Dollar. A lower figure would resume the Greenback's downtrend.
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According to Adobe, Black Friday sales soared $9.12bn despite headwinds like high inflation, rising interest rates, recession fears and uncertain geopolitical outlook - what made consumers buy goods so willingly?
Americans still have excessive savings from the pandemic era, and were clearly delighted to see price cuts – partially related to high inventories and the unsnarling of supply chains. Recession fears, uncertainty and political polarization have negatively impacted sentiment, but not actual shopping. There is a gap between what Americans say about the state of the broad economy and what they feel and see in their community. Moving forward, I think consumption will ease, but not collapse, staving off a recession in the US.
