Oil Rebounds as Markets Await US Inflation and Jobs Data
Summary
Oil prices rose on Monday after President Donald Trump rejected a proposed peace deal with Iran, keeping concerns around energy supply in focus
The dollar remains near a two-month high after recording a second consecutive weekly gain
Sterling is trading near three-month lows as Bank of England officials continue to assess the inflationary impact of higher energy prices
US inflation and employment data, UK GDP and euro area inflation are all due this week
After September’s major central-bank decisions, attention is shifting back towards economic data and energy markets. Oil prices rose more than 1% on Monday after President Trump rejected a proposed agreement with Iran aimed at resolving the conflict and reopening the Strait of Hormuz. The dollar also held close to a two-month high as higher energy prices and expectations of further Federal Reserve tightening continued to support US yields.
The Federal Reserve raised rates by a quarter point earlier this month, taking its target range to 3.75%–4.00%. Since then, several Fed officials have continued to highlight inflation risks, while markets have increased expectations of another increase at the October meeting. The dollar completed a second consecutive weekly gain on Friday before strengthening again on Monday.
This week provides the next major updates on both inflation and employment. The Federal Reserve’s preferred PCE inflation measure is released on Wednesday, followed by September’s employment report on Friday. Job openings data arrive on Tuesday, providing an earlier update on labour demand. Both the PCE and payroll figures follow a September rate increase that the Fed said was intended to support a more timely return of inflation to its 2% target.
Sterling remains close to its weakest level against the dollar in almost three months. The Bank of England left Bank Rate unchanged at 3.75% earlier this month in a 6–3 decision, with three policymakers favouring an increase. Governor Andrew Bailey said last week that persistently high energy prices were making the decision to keep rates unchanged more difficult, while noting that evidence of broader second-round inflation effects remained limited. Revised second-quarter UK GDP and balance-of-payments figures are due on Wednesday.
The euro has also lost ground against the stronger dollar, recording a third consecutive weekly decline last week. The ECB raised its deposit rate to 2.50% in September after inflation remained above target. Final data subsequently confirmed euro area inflation at 3.2% in August, slightly below the earlier flash estimate, with the first estimate for September due on Friday.
Events to Watch This Week:
Tuesday 29 September: US JOLTS job openings for August
Wednesday 30 September: US PCE inflation; revised UK Q2 GDP and balance of payments
Friday 2 October: US employment report for September; euro area flash inflation for September
The week therefore brings fresh inflation, employment and growth data following September’s rate decisions from the Federal Reserve, Bank of England and ECB. For businesses managing sterling, dollar or euro requirements, these releases provide the next major updates on the economic conditions being assessed by each central bank.
Speak to the Orbis dealing team ahead of this week’s key releases to discuss your upcoming currency requirements.
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