A dispute over the size of oil supply increases in the coming months led to the suspension of OPEC+ talks late last week. The talks are expected to resume today and perhaps a consensus will be reached.
Brent crude oil prices climbed to $76 per barrel today, leveling off 2018 peaks. Investors continue to follow the actions of OPEC+ and the chances of an agreement. The cartel will meet again today to work out an agreement on production levels for H2 this year and for 2022.
Two attempts to reach an agreement failed last week. The United Arab Emirates blocked an initiative by leading producers Saudi Arabia and Russia. It assumed an increase in production by 2 million barrels per day in the second half of this year. The parties in favor of such a solution claimed that it was contingent on the revision of the base production.
Now, investors may be concerned that in the absence of an agreement, major producers may continue production at current levels, which could further elevate oil prices.
Three events that may affect currencies
After Friday's data from the U.S. labor market, where an increase in the unemployment rate was reported, the U.S. dollar seems to have lost some value. The euro, on the other hand, is trying to make up for its losses. At the beginning of the first week of July, the single currency remained near its weakest levels since early April. The euro lost 3.1 percent against the dollar in June as dovish comments by ECB officials contrasted with the hawkish turn by the US Federal Reserve at its last meeting. At the same time, the outlook for a solid recovery in Europe continued to be supported by upbeat economic data, while concerns about the spread of the Delta variant of the coronavirus increased ahead of the key holiday season.
Investors await the FOMC minutes (Wednesday) and the ECB monetary policy meeting report (Thursday) for further clarification on the next steps in monetary policy.
Today, on the other hand, UK Prime Minister Boris Johnson is expected to set out what the final stage of the easing plan will look like. It is likely that the British government will remove the remaining restrictions caused by the outbreak on July 19, with UK Housing Secretary Robert Jenrick saying that existing rules, such as a mandatory face mask, will become a matter of personal choice.
Sterling lost 2.8 percent against the U.S. dollar in June, its worst month since September, as the Bank of England's dovish stance contrasted with a hawkish shift by the U.S. Federal Reserve.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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