Oil prices are kick starting the week by trading in positive territory. This is mainly because Hungary continues to resist an EU plan to prohibit Russian oil imports. This is delaying the bloc’s complete package of penalties aimed at President Vladimir Putin for his conflict in Ukraine. A meeting of the EU’s 27 ambassadors concluded without a deal yesterday, with negotiations anticipated to resume in the following days.
Speculators are not betting that a embargo on Russian oil being shipped to third nations might be postponed unless the Group of Seven commits to similar restrictions. The EU’s plan calls for a six-month embargo on crude oil and an early January restriction on refined fuels.
Dollar: Nothing is off the table, this was the message from the Richmond President Thomas Barkin. Remember, recently the Fed Charman, Jerome Powell has assured the market players that they need to worry about an interest rate hike of 75 basis points as the Fed doesn’t anticipate such an aggressive monetary policy. However, Barkin said “I’ll just say our tempo right now is fairly rapid, and if you go by the chairman’s pace, that’s a pretty accelerated pace.” If we hear a similar rhetoric from other Fed members in the coming week, we could see the dollar index picking up more steam.
Sterling: The Bank Of England increased the interest rate for the fourth consecutive time this year last time. Despite their 25 basis interest rate hike, Sterling continues to trader weaker against most G10 countries as most of them know that the currency is in a difficult spot as the UK’s economy is facing a stagflation environment. Sterling bears are back in command, with our $1.25-$1.20 range surpassed ahead of schedule and negative momentum prevailing. The next target is $1.20, but euro-sterling bulls are in good shape since the focus appears to be on sterling’s downward trend for the time being.
The housing market in the United Kingdom is bracing for challenges as rising borrowing costs is only making matters more difficult for consumers. The additional cost-of-living issue are further straining house purchasers’ affordability. Mortgage lenders are hiking interest rates from historic lows, following the Bank of England’s lead. This makes owning a house more expensive at a time when costs for everything from electricity to clothing are seeing the highest levels of inflation since the 1980s.