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Saudi Arabia, Some OPEC Members Clash Over Oil-Production Quotas

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Saudi Arabia and some OPEC members clashed over who would produce how much oil ahead of a contentious group meeting on Sunday, people familiar with the matter said, in a sign of growing tensions within the cartel amid concerns over weakening global energy demand.

Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, demanded smaller African producers cut their quotas, according to the people. At the same time, the kingdom was in talks with the United Arab Emirates, another powerful member of the group, to allow it to produce more, they added.

Saudi Oil Minister Prince Abdulaziz bin Salman called some of the African delegates to his hotel suite in Vienna on Saturday and told them that their production quotas within the group would be reduced, the people said. They walked out of the meeting without a deal, the people added. African countries such as Nigeria and Angola have often struggled to even meet their current production targets for various reasons, including pandemic shutdowns that proved hard to reverse and years of underinvestment.

Representatives for the energy ministries of Saudi Arabia, the U.A.E., Nigeria, Angola, Equatorial Guinea, Gabon and the Republic of Congo didn’t immediately respond to requests for comment.

A production cut of up to 1 million barrels a day is on the table as OPEC and its Russia-led allies, known as OPEC+, meet this weekend in Vienna to decide on a production plan, delegates said. The broader 23-member group accounts for more than half the world’s oil production. The delegates said a cut in production is expected to prop up crude prices amid concerns that a slowing global economy would crimp energy demand. Still, most members don’t want to give up their allotted production quotas as that affects their overall revenues.

If approved, Sunday’s output cut would be the third by members of OPEC+ since October, when they slashed output by 2 million barrels a day. In April, some of the group’s largest members, including Saudi Arabia and Russia, cut a further 1.6 million barrels a day. The decision to cut had drawn rebuke from the U.S., which at the time had requested Saudi Arabia and OPEC to increase production to help tame inflation. It led to U.S. accusations that Riyadh was siding with Moscow in Russia’s invasion of Ukraine.

Brent crude, the international oil benchmark, is down more than 20% since OPEC and its allies first jolted the market with output cuts in October. Another output cut on Sunday isn’t expected to evoke any major reaction from Washington as most analysts expect that oil prices will continue to trend low.

Forex

Dollar slips ahead of GDP data; euro rises and yen surges

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Investing.com – The U.S. dollar slipped lower Thursday, the euro posted small gains while the Japanese yen climbed to multi-month highs ahead of next week’s Bank of Japan meeting.  

At 05:25 ET (09:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, fell 0.2% to 103.950, extending an overnight decline.

Dollar slips ahead of GDP data

The dollar retreated Thursday, extending an overnight decline amid increasing confidence that the will cut interest rates in September.

data for the second quarter are due later in the session, and is expected to show annualized growth of 2.0%.

This would be above the 1.4% growth seen in the first quarter, but would remain considerably slower than the 4.2% pace seen in the second half of last year.

The release will also show inflation slowed considerably last quarter, with the GDP price index falling to 2.6% from 3.1%, ahead of Friday’s price index data, the Federal Reserve’s favored gauge of inflation.

The Fed is set to meet next week, and is widely to keep interest rates steady while signaling a rate cut in September. 

German business morale falls again

In Europe, rose 0.1% to 1.0847, with the euro edging higher despite German business morale unexpectedly falling in July, the third consecutive decline in Germany’s most prominent leading indicator..

The Ifo institute said its sank to 87.0 in July from 88.6 in June.

“The German economy is stuck in the crisis,” said Ifo president Clemens Fuest.

The kept interest rates on hold at 3.75% last week, but markets are pricing in just short of two more ECB rate cuts for the rest of this year.

traded 0.2% lower at 1.2885, falling back from the 1.30 level ahead of next week’s Bank of England policy-setting meeting.

UBS expects the central bank to trim interest rates in what is widely seen as a close call as to when it will start what is likely to be a slow and steady reduction path.

Yen goes from strength to strength 

In Asia, fell 0.7% to 152.72, with the pair falling to its weakest level in 2-1/2 months as traders abandoned short yen bets in the run up to the BOJ’s July meeting in the wake of suspected currency market intervention by the Japanese government.

The is expected to consider a 10 basis point hike, and could unveil a plan to roughly halve bond purchases in coming years.

“USD/JPY has now corrected 6% off its high. This has proved another successful intervention campaign for Japanese authorities,” said analysts at ING, in a note. 

“We think the success of the intervention has had less to do with the size of the FX sales and more to do with the timing. As was the case in September/October 2022, Japanese FX intervention has been timed to coincide with a dovish reappraisal of Fed policy. Very clever.”

slipped 0.5% lower to 7.2281, but remained near an eight-month high amid persistent concerns over a slowing economic recovery in the country. Surprise rate cuts by the People’s Bank added to pressure on the currency and did little to lift spirits over the Chinese economy.

 

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Investors turn long on Singapore dollar after 7 months; bearish bets on Asian FX ease – Reuters poll

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By Roushni Nair

(Reuters) –

Investors turned bullish on the Singapore dollar for the first time since mid-December as the city-state’s growth and inflation dynamics continue to support the local unit, while bearish bets on most Asian currencies eased, a Reuters poll found on Thursday.

Long positions on the Singapore dollar were at their highest since early April 2023, while bearish bets on the Malaysian ringgit fell to levels seen in April last year, according to a fortnightly poll of 10 analysts.

The Monetary Authority of Singapore (MAS) does not seem to be in a hurry to ease policy settings after a core inflation reading of above 3% in May with growth in the second quarter coming in strong at 2.9%, according to analysts.

MAS will conclude its policy meeting on Friday, with analysts expecting the central bank to maintain its hawkish stance and hold on to its current policy settings even as inflation in June was at a two-year low.

“The strong data (growth and inflation) and the continued appreciation of the SNEER (Singapore dollar nominal effective exchange rate) make us continue to like the SGD on a relative-value basis and against low-yielders in the region,” analysts at Bank of America said in a note.

However, any spike in oil prices due to geopolitical events would exert upside pressure on Singapore dollar’s safe-haven status, they added.

Singapore is among the few countries in the world with a triple-A sovereign credit rating that is reflective of exceptionally strong fiscal and external balance sheets, factors that firm its position as a safe harbor for investors.

Meanwhile, markets have priced in a 100% chance of an interest rate cut by the U.S. Federal Reserve as early as September, with investors awaiting a slew of macroeconomic data, including second-quarter growth figures, to further validate their bets. [FEDWATCH]

Declining interest rates in the U.S. would take the shine off the dollar as it could lead to lower foreign investments while triggering a risk-on sentiment for emerging Asian currencies.

This has resulted in short bets on the Philippine peso and Thailand’s baht also easing significantly.

Bearish positions on the Chinese yuan and the Taiwanese dollar were at their highest since June 27.

Markets in Taiwan extended losses, pressured by statements from Washington last week that hinted at the possibility of tougher curbs for exports of advanced semiconductor technology to China.

Taiwan markets were closed for a second successive day because of bad weather.

The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.

The figures include positions held through non-deliverable forwards (NDFs).

The survey findings are provided below (positions in U.S. dollar versus each currency):

DATE USD/SG USD/ID USD/IN USD/TH

D R R B

25-Jul-24 1.07 0.79 -0.33 0.35 0.86 0.12 0.39 0.43 0.02

11-Jul-24 1.05 0.87 0.06 0.73 0.68 0.22 1.03 0.86 0.51

27-Jun-24 1.34 1.28 0.80 1.49 0.88 0.46 1.00 1.37 0.91

13-Jun-24 0.95 0.87 0.62 1.22 0.64 0.37 1.00 1.23 0.92

30-May-24 1.05 0.72 0.33 0.94 0.53 0.00 0.81 1.19 1.00

16-May-24 1.05 0.96 0.35 0.96 1.02 0.39 1.23 1.29 1.00

2-May-24 1.25 1.61 0.89 1.39 1.40 0.49 1.46 1.44 1.39

18-Apr-24 1.25 1.59 0.80 1.32 1.24 0.43 1.42 1.19 1.28

© Reuters. FILE PHOTO: A Singapore dollar note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File photo

4-Apr-24 1.18 1.09 0.42 1.13 1.17 0.00 1.15 0.62 1.35

21-Mar-24 0.92 0.82 0.33 0.60 0.92 -0.54 1.12 0.47 1.13

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US dollar pares losses after economic data

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NEW YORK (Reuters) – The U.S. dollar trimmed losses on Thursday after data showed the the world’s largest economy expanded faster than expected and inflation slowed in the second quarter.

© Reuters. FILE PHOTO: U.S. Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The greenback came off lows against the surging yen and was last down 0.4% at 153.16. It was at 152.68 yen before the data. The was slightly down at 104.32 after the data. It was at 104.21 just before.

Advance estimates showed that gross domestic product grew at a 2.8% annualized rate last quarter. Economists polled by Reuters had forecast GDP rising at a 2.0% rate.

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