Concerns about a global economic slowdown dominated markets on Monday, sending oil prices lower and pushing investors to expect a dovish tone from the Federal Reserve in its statement later this week.
Oil prices slumped modestly in light of weak global data that hinted to decreased demand but remained supported by OPEC’s production cuts which were implemented at the beginning of the year to keep prices from declining. U.S. WTI futures were down 0.07 percent as of 2:57 p.m. HK/SIN, to $58.48 per barrel. Brent crude futures were trading slightly higher, up 0.22 percent to $67.31 per barrel. The International Energy Agency (IEA) announced on Friday that it expects oil markets to be in a modest deficit from the second quarter of this year. Meanwhile, OPEC remains committed to its production cuts, as does Russia, at least until the end of June. Likewise, the Unites States remains committed to its sanctions against Iran and Venezuela, which will help to curb global supply as well.
Currency Movements
On Monday, reports that Japan’s exports declined for the third consecutive month ruffled markets and weakened the yen. The dollar gained 0.07 percent against the yen to trade at 111.53, though the greenback remained soft against the rest of its primary trading partners. Similarly weak data out of the U.S. on Friday confirmed a 0.4 percent decline in U.S. manufacturing output in February, and fanned investor concerns about the Federal Reserve taking a dovish policy tone later this week. According to Reuters, many investors expect the Fed to put rates on hold in the near future and to present a plan to end its balance sheet runoff later in 2019.
The dollar index eased 0.15 percent by the mid-afternoon, to 96.45 .DXY. The index saw its steepest weekly loss last week since August. The euro posted strong gains against the dollar, up 0.13 percent to $1.1339, while the Australian dollar soared 0.41 percent higher against the greenback.