FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?

Economic

Summary:

The more hawkish tone from the FOMC meeting seems to have triggered some sell-the-news across Wall Street, which then cascaded into heavy profit-taking, given the stellar run-up we’ve had this year.

FOMC meeting round-up

The Federal Reserve (Fed) delivered a 25 basis point (bp) rate cut overnight to the range of 4.25%-4.5% as widely expected. While there are already some expectations for the Fed to come in more cautious on rate outlook compared to their November meeting, the totality of the economic projections and the press conference has called for a more hawkish recalibration in rate expectations.

Markets were previously eyeing three 25 bp cuts in 2025, but the updated dot plot showed policymakers leaning toward just two cuts in 2025 and two more in 2026. This was justified by a significant upward revision in inflation forecasts (2.5% for 2025 from 2.1% prior), alongside stronger growth (2.1% in 2025 real gross domestic product (GDP) from 2.0% prior).

Hopes that these numbers would be counterbalanced by some tints of dovishness in terms of data-dependency from the Fed Chair Jerome Powell were disappointed as well. There seems to be little reeling-in from the Fed Chair, with comments of “more cautious” on cuts ahead, labelling it as a “new phase”, recent cut being a “closer call” and him seeing slower progress on inflation.

Takeaways

The more hawkish tone from the Federal Open Market Committee (FOMC) meeting seems to have triggered some sell-the-news across Wall Street, which then cascaded into heavy profit-taking, given the stellar run-up we’ve had this year. While there are expectations that the Fed will turn more cautious at the recent meeting, the pronounced market decline may not align with the actual level of hawkishness, hinting at a potential move to flush out short-term speculators.

The future trajectory of rate cuts may also hinge on the policies of President-elect Donald Trump, which remain unclear at this stage. His initial rhetoric on tariffs does sound aggressive, but the extent to which these measures will be implemented is uncertain. As such, there is the possibility that the Fed might initially lean toward a shallower rate path, reserving the option to adjust course as more policy clarity emerges.

With the FOMC meeting behind us now, we may expect some calm to return (provided the upcoming Bank of Japan (BoJ) meeting does not throw in any more surprises), which may see a drift higher in Wall Street over the final two weeks of the year. But given the lack of further catalysts, pushing to a new record high by year-end also seems like a challenging task as well.

U.S. dollar at highest level since November 2022

The hawkish tone from the Fed meeting drove a surge in U.S. Treasury yields, with the 10-year yield surpassing 4.5%, propelling the U.S. dollar to its highest level since November 2022. Some cooldowns may be on the horizon, as rate expectations have already adjusted to reflect a more hawkish Fed path, potentially prompting some profit-taking in the absence of strong new catalysts.

Technical risks, such as the possibility of a lower high on the daily relative strength index (RSI), warrant consideration. However, the broader upward trend is likely to persist until there is greater clarity on President-elect Trump’s policy agenda. Any cool-off could still come short-lived for now, while buyers may eye for a retest of its 109.00 level of resistance over the longer term.

FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?_1

Gold prices dipping below support confluence

A stronger U.S. dollar and higher bond yields have seen gold prices reacting to the downside overnight, putting the key support confluence at the $2,610 level at risk of breaking down. This level represents both a critical trendline support and the 100-day moving average (MA). Adding to the bearish signals, the daily moving average convergence/divergence (MACD) has turned lower, failing to cross into positive territory, while prices have slipped below the daily Ichimoku Cloud support for the first time since March 2024. Should the downside persist, sellers may target the November 2024 low at $2,534 as the next key level. FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?_2

FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?_2

Japan 225 back to retest lower trendline of ascending triangle

Asian markets extended Wall Street’s broader sell-off, weighed down by a stronger U.S. dollar and rising bond yields. The Nikkei 225 has retreated to retest the lower trendline of an ascending triangle pattern, aligning with its daily Ichimoku Cloud support. So far, buyers have defended the 38,442 level, keeping the higher-lows formation intact. Sustaining this structure could signal a continuation of the upward trend, with the 40,220 level emerging as the next key resistance to watch.

Looking ahead, the BoJ meeting will be a crucial event. Market participants are hoping for minimal surprises, with expectations for the central bank to maintain current rates while signalling a gradual path toward rate hikes in 2025. FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?_3

FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?_3

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Justin

Stocks

Economic

BANGKOK (AP) — Shares skidded Thursday in Asia after U.S. stocks tumbled to one of their worst days of the year when the Federal Reserve hinted it may deliver fewer rate cuts in 2025 than earlier thought.

The Fed cut its key rate by a quarter of a percentage point to between 4.25% and 4.5%, as expected. Other major central banks have stood pat this week, with the Bank of Japan opting Thursday to keep its benchmark rate at 0.25%. That decision, which was expected, pushed the dollar higher against the Japanese yen.

Asian markets fell, but generally by less than 2%, with Tokyo's Nikkei 225 falling 0.7% to 38,806.70. The dollar was trading at 155.24 yen by midday Thursday, up from 154.79 yen.

A weaker yen tends to push prices higher in Japan, which depends heavily on imports, and that in turn raises pressure on the Bank of Japan to raise rates. Analysts say they expect a BOJ rate hike in January, but also that the central bank is wary of big changes as it waits to see possible shocks from President-elect Donald Trump's policies on tariffs.

There are “high uncertainties” surrounding Japan's business outlook and prices and developments in foreign economies and commodity prices, the BOJ said in a statement.

Chinese markets also declined. The Hang Seng index fell 1% to 19,666.12, while the Shanghai Composite index dropped 0.7% to 3,357.82.

Australia's S&P/ASX 200 shed 1.9% to 8,153.80, while the Kospi in South Korea slipped 1.5% to 2,447.17. India's Sensex fell 0.9%.

On Wednesday, the S&P 500 fell 2.9%, just shy of its biggest loss for the year, to close at 5,872.16. The Dow Jones Industrial Average lost 1,123 points, or 2.6%, to 42,326.87, and the Nasdaq composite dropped 3.6% to 19,392.69.

The Russell 2000 index of small-cap stocks tumbled 4.4%.

Wednesday's rate cut is the third this year after it began in September to lower rates from a two-decade high to support the job market. Wall Street loves easier interest rates, but the cut was already widely expected and investors were more focused on how much more the Fed will cut next year.

A lot is riding on it, particularly after expectations for a series of cuts in 2025 helped the U.S. stock market set an all-time high 57 times so far in 2024.

Fed officials released projections on Wednesday showing the median expectation among them is for two more cuts to the federal funds rate in 2025, or half a percentage point’s worth. That’s down from the four cuts expected just three months ago.

“We are in a new phase of the process,” Fed Chair Jerome Powell said.

Asked why Fed officials are looking to slow their cuts, he pointed to how well the job market is performing overall and how recent inflation readings have picked up.

Powell said some Fed officials, but not all, are also already trying to incorporate uncertainties inherent in a new administration coming into the White House. Worries are rising on Wall Street that President-elect Donald Trump’s preference for tariffs and other policies could further fuel inflation.

“When the path is uncertain, you go a little slower,” Powell said. It’s “not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down.”

The reduced expectations for 2025 rate cuts sent Treasury yields higher, squeezing the stock market.

The yield on the 10-year Treasury rose to 4.51% from 4.40% late Tuesday, which is a notable move for the bond market. The two-year yield, which more closely tracks expectations for Fed action, climbed to 4.35% from 4.25%.

Nvidia, the superstar stock responsible for a chunk of Wall Street’s rally to records in recent years, fell 1.1% to extend its weekslong funk. It has dropped more than 13% from its record set last month and fallen in nine of the last 10 days as its big momentum slows.

In other dealings early Thursday, U.S. benchmark crude oil gave up 41 cents to $69.61 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 39 cents to $73.00 per barrel.

The euro rose to $1.0377 from $1.0355.

Sources: yahoo finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Pepperstone

Economic

As expected, and in line with money market pricing, the FOMC delivered a 25bp cut at the conclusion of the December FOMC meeting, thus lowering the target range for the fed funds rate to 4.25% to 4.50%.

Said cut marks the third reduction this year, as the Fed continue to move back to a more neutral policy stance, with a cumulative 100bp of easing having been delivered in 2024. This easing has come as policymakers attempt to stick the ‘soft landing’, and as risks to either side of the dual mandate come back into balance.

December 2024 FOMC Review: A Cut Now, A Skip Next_1

In contrast to the November meeting, the decision to deliver a 25bp cut was not a unanimous one, with Cleveland Fed President Hammack instead preferring to hold rates steady at this meeting.

Meanwhile, as always, accompanying the rate decision was the FOMC’s updated policy statement. Broadly, this was a repeat of that issued after the prior confab, with the Committee reiterating that the economy continues to expand at a "solid pace", that unemployment "remains low", and that inflation remains "somewhat elevated".

One notable change, though, was amending the phrase “additional adjustments” in the fed funds rate, to be prefaced by “the extent and timing of” such changes, perhaps a nod towards some increased flexibility in the policy outlook as we move into 2025.

December 2024 FOMC Review: A Cut Now, A Skip Next_2

Along with the statement, the December FOMC also saw the release of the Committee’s updated Summary of Economic Projections (SEP), including the all-important ‘dot plot’.

The dots, which had previously implied a median expectation for 100bp of further cuts next year, taking the fed funds rate midpoint to 3.375%, were revised substantially in a hawkish direction. As such, the dots now imply just 50bp of easing next year, with the fed funds rate set to end 2025 at 3.875%, before a further 50bp of easing in 2026, followed by just one 25bp cut in 2027. The longer-run estimate of the fed funds rate, a proxy for the neutral rate, was also nudged higher to a round 3%.

December 2024 FOMC Review: A Cut Now, A Skip Next_3

In addition to the dots, the SEP also included the FOMC’s latest round of economic projections, outlined below.

These projections, though, are likely to have a very short shelf life indeed, as they are conditioned on an assumption that the current fiscal ‘status quo’ will continue through the forecast horizon, and do not account for any policies, such as tariffs and tax cuts, that President-elect Trump may introduce after Inauguration Day in January. As such, the projections are not worth losing any sleep over, and are likely to be revised significantly come the next forecast round, in March.

December 2024 FOMC Review: A Cut Now, A Skip Next_4

After all of the above had been digested, it was then time to grapple with Chair Powell’s post-meeting press conference.

During the presser, Powell noted that policy is now “significantly less restrictive”, and that the FOMC can now “be more cautious” as further rate adjustments are considered. Furthermore, while stressing that policy is not on a “pre-set course”, and that today’s decision was a “closer call” than in November, Powell flagged that restriction could be dialled back more slowly if signs emerge that inflation is not moving sustainably towards 2%, while also flagging the possibility of faster easing in the event of unexpected labour market weakness, or inflation falling faster than foreseen. The reaction function, then, is considerably more two-sided in 2025, than in 2024.

In reaction to the statement, projections, and press conference, money markets repriced in a hawkish direction. The curve now prices next-to-no chance of any policy action at the January meeting, while seeing the March decision as a coin-flip for another 25bp cut. Further out, there are now just 38bp of cuts priced for the entirety of next year, down from around 45bp yesterday.

December 2024 FOMC Review: A Cut Now, A Skip Next_5

More broadly, markets displayed a hawkish reaction across the board.

Subsequently, Treasuries sold-off across the curve, led by the front-end, with 2-year yields rising over 10bp from pre-release levels, vaulting north of 4.30%. That, in turn, saw the dollar gain ground against all major peers, with the DXY rallying above the 108 figure, the EUR surrendering the 1.04 handle, cable sliding back under 1.26, while the AUD and NZD both slipped over 1.5%. Stocks also lost ground, with the S&P future falling over 1%, and sliding under 6,000.

December 2024 FOMC Review: A Cut Now, A Skip Next_6

Taking a step back, the December FOMC, as expected, saw Powell & Co. build in a greater degree of optionality into policymaking next year, broadly reflective of the two-sided inflation, and employment, risks that are likely to present themselves next year. This, subsequently, has opened the door to a ‘skip’ at the January meeting, though incoming data between now and the end of January will determine whether a pause is indeed appropriate to begin the new year.

For now, my base case is indeed that the FOMC will pause in January, in order to allow policymakers to take stock of the impact of the rate cuts delivered to date, and to digest the early economic announcements made by the Trump Administration.

More broadly, the year ahead is likely to see a slower pace of policy normalisation, with risks around the monetary outlook more two-sided in nature – the Committee remain prepared to ease quicker in order to prevent further labour market weakness, but also ease more slowly were disinflationary progress to stall.

Thus, the ‘Fed put’ which has supported risk appetite so forcefully in 2024, is unlikely to do so to the same degree in 2025. Though the path of least resistance for equities should continue to lead to the upside, albeit said path will likely be bumpier, and volatility higher, than seen over the last couple of years.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Cohen

Economic

Central Bank

Governor Kazuo Ueda’s policy board left its benchmark rate at around 0.25%, according to a statement Thursday, an outcome expected by more than half of economists surveyed by Bloomberg.

The bank indicated the economy is moving in line with its expectations, a prerequisite for a rate hike, by reiterating that the inflation trend appears to be consistent with its target for the second half of its outlook period.

Board member Naoki Tamura voted against the stand-pat decision, and proposed a rate hike to 0.5% at this gathering. This was the first proposal against keeping borrowing costs steady after Ueda took the BOJ’s helm in April last year.

The yen weakened against the dollar immediately after the policy statement was released.

Ueda is searching for the right moment for his third rate increase, with recent economic indicators showing inflation is moving in line with the BOJ’s projections. While January has become the most popular timing for the next hike among market participants, the vote against holding rates is likely to keep expectations high for a move next month.

The central bank may also have been reluctant to raise rates in December given the potential for bad optics. Prime Minister Shigeru Ishiba’s minority government is currently negotiating with an opposition party wary of early rate hikes to ensure support for next year’s annual budget. Those negotiations are expected to wrap up in the coming days.

Sources: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

Economic

[Quick Facts]

1. Fed cuts rates by 25 basis points, signaling a slower pace ahead.

2. Fed adjusts key reverse repo rates for the first time since 2021.

3. Bond traders bet on larger 2025 rate cuts by the Fed than expected.

4. Morgan Stanley: BoE may suggest further rate cuts this week.

5. London rent surge sets record, weighing on the labour government.

6. UK inflation rose 2.6% in Nov., cementing no-rate-cut expectations.

[News Details]

Fed cuts rates by 25 basis points, signaling a slower pace ahead

On December 18th, local time, the Fed concluded its December interest rate decision by lowering the benchmark interest rate by 25 bps to a range of 4.25%-4.50%, aligning with widespread market expectations. The dot plot indicates a revised outlook for the Fed, expecting two rate cuts in 2025, each by 25 bps, up from the four cuts anticipated in September, also at 25 bps each. The projection for 2026 remains consistent with the September forecast, with two rate cuts of 25 bps each expected.

The Federal Open Market Committee (FOMC) has raised its median forecast for the Personal Consumption Expenditures (PCE) inflation to 2.5% for 2025, up from the 2.1% anticipated in September. Fed officials now project that inflation will reach the 2% target by 2027, a delay from the previously expected 2026 timeline.

In a subsequent press conference, Chairman Jerome Powell noted the addition of language regarding the "magnitude and timing" of rate adjustments in the FOMC statement, signaling that the Fed is at or near the point of slowing the pace of rate cuts, with decisions in the coming year to be data-dependent.

Powell remarked that the labor market has cooled from its overheated state, with inflation now closer to the 2% target. The unemployment rate has edged higher but remains low, and the labor market is no longer a source of inflationary pressure.

Following the rate decision announcement, the US dollar index rose instead of falling, indicating that the magnitude of the rate cut was insufficient. A key objective of Trump's administration has been to bring manufacturing back to the U.S. and increase exports, which requires a weaker US dollar relative to other currencies. In this context, with major central banks globally easing rates, the Fed's 25 bps rate cut last night appears to be inadequate.

Fed adjusts key reverse repo rates for the first time since 2021

In addition to the rate cut, the Fed also reduced the interest rate on one of its key tools used to control the benchmark, ensuring the smooth operation of the U.S. financing market. According to the policy statement, officials lowered the Overnight Reverse Repurchase Agreement (RRP) tool rate by 5 bps relative to the lower bound of the target range. With the Fed's federal funds rate now set at the 4.25%-4.50% target range, the new RRP rate stands at 4.25%, matching the lower bound of the target range for the first time since 2021.

Bond traders bet on larger 2025 rate cuts by the Fed than expected

Several bond traders have been increasing their options and futures bets that the Fed's implied rate cuts for next year will exceed market expectations. As the Fed's policy decision looms in the afternoon, U.S. Treasuries edged higher on Wednesday. With the Fed's 25 bps rate cut largely considered a done deal, the market's attention is now squarely on the Fed's latest quarterly projections.

The September dot plot indicated that officials anticipated a total of 100 bps in rate cuts for both this year and next. However, considering the sticky nature of inflation data, the overall market is wagering that the Fed will revise downwards its projections for rate cuts in the coming year, with swap rates suggesting that the Fed will only deliver 50 bps in cuts for 2024.

Morgan Stanley: BoE may suggest further rate cuts this week

In a report, Morgan Stanley's UK economist Bruna Skarica stated that following the release of the UK's November inflation data on Wednesday, the Bank of England (BoE) may signal further rate cuts in Thursday's interest rate decision. The UK's monthly core inflation remained flat, below analyst expectations, due to a slowdown in service sector inflation. The lower-than-anticipated core inflation rate could prompt the BoE to signal more rate cuts in the coming months than the market currently anticipates. Data indicates that the market expects the BoE to cut rates by 49 bps by 2025. Skarica commented, "We expect the next rate cut from the BoE to come in February, with a total of 125 bps in cuts for next year."

London rent surge sets record, weighing on the labour government

London's housing rents are skyrocketing at a record pace, exacerbating the crisis faced by the city's tenants. According to the Office for National Statistics on Wednesday, the YoY increase in private residential rents in November surged from a previous 10.4% to 11.6%. This marks the largest increase since comparable data began in 2016. Also, the monthly rise of 1.6% set a new record. These figures will intensify pressure on the new Labour government to increase housing supply—a key issue in the July elections. Prime Minister Keir Starmer had pledged to build 1.5 million homes within five years to alleviate the shortage. However, high interest rates and a weakening real estate market have led to a significant drop in housing starts. Additionally, the market is concerned about property owners selling off their assets due to tax crackdowns and mortgage rate hikes.

UK inflation rose 2.6% in Nov., cementing no-rate-cut expectations

The Office for National Statistics (ONS) revealed in its Wednesday inflation report that the UK's inflation rate rose to 2.6% in November, marking the second consecutive month of increases in the overall figure. This reading aligns with forecasts from economists polled by leading financial media and surpasses the 2.3% figure recorded in October. Core inflation, which excludes energy, food, alcohol, and tobacco, stood at 3.5%, slightly below the anticipated 3.6%.

The persistent inflation in the service sector, a dominant part of the UK economy, has led to currency market predictions that it is nearly impossible for the BoE to cut rates at Thursday's final monetary policy meeting of the year. Earlier this week, the ONS reported that normal wage growth from August to October rose from 4.9% in the July-to-September period to 5.2%, further solidifying market bets against a rate cut by the BoE. Research institute Capital Economics stated that the November inflation data "strongly rules out" the possibility of a rate cut by the BoE in December.

[Today's Focus]

UTC+8 11:00 BOJ's December Interest Rate Decision

UTC+8 14:30 BOJ Governor Kazuo Ueda's Monetary Policy Press Conference

UTC+8 20:00 BoE's December Interest Rate Decision

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FOREX.com

Economic

Nasdaq respectful through the rout

Nasdaq futures may have had an ugly decline following the Fed’s rate decision but it’s noteworthy the price remained respectful of technical levels, bouncing off 21340.75 at the height of the carnage.

It’s far too early to call a bottom, especially with momentum indicators mixed: MACD has crossed over from above, generating a bearish signal, but the long-running uptrend in RSI (14) remains intact. Therefore, rather than trying to anticipate directional risks based on thin volumes going through in Asian trade, I’d much rather see how the price action evolves into Europe and US.

Nasdaq Bounce or Break? 21340 Becomes the Battleground_1

If the price tests and holds 21340 again, longs could be established above the level with a stop beneath for protection. Apart from a minor level at 21608, there’s little visual resistance until the record highs.

Another potential bullish setup would be if the price pushes above and holds 21608, allowing for longs to be established above with a stop beneath for protection.

Alternatively, if the price breaks 21340 without being able to reverse back higher, you could flip the setup around, selling beneath the level with a stop above for protection. 20984 and important 50-day moving average are nearby levels of note, with a break of the latter opening the possibility of a deeper flush towards 20400.

Monumental hawkish shift? Really?

More broadly, for the carnage witnessed following the Fed, its updated rate projections were not significantly different to what traders were anticipating before the event. And when you step back and look at where markets see the funds rate bottoming, it’s around 70bps higher than the Fed’s dot plot. The Fed remains far more dovish.

What the Fed signalled was a slower pace of cuts, not a large reduction in cuts. One 25bps move was removed from the funds rate forecast track by the end of 2027. That’s it. Based on the market reaction, you’d think multiple cuts were removed!

That makes me think the move was more about market positioning rather than a monumental hawkish shift from the FOMC, making me question how long the rout can be sustained when that reality sets in.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Alex

Economic

Commodity

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.50 on Thursday. The WTI price posts modest gains as US crude inventories fell and the US Federal Reserve (Fed) lowered its key interest rate by a quarter percentage point on Wednesday.

However, the signal that the US central bank would slow the pace of reductions might cap the upside for the black gold. The Fed made its third consecutive cut of 2024, reducing the federal funds rate by 25 basis points (bps) at its December meeting on Wednesday.

The US central bank signalled it would slow the pace of the easing cycle as sticky inflation and US President-elect Donald Trump's proposed policies could prove inflationary. The Fed officials indicated that it probably would only lower twice more in 2025. This, in turn, lifts the Greenback and exerts some selling pressure on the USD-denominated commodity price as it makes oil more expensive in other countries, which can reduce demand.

Additionally, the concerns about the weakness in consumer spending in China, the world's largest oil importer, could weigh on the WTI price. “Bearish momentum spawned by the China data destroyed any hopes speculators had of breaking out of the two-month range to the upside,” noted Robert Yawger, director of the energy futures division at Mizuho Securities USA.

A decline in US crude inventories last week might provide some support to the WTI. The Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending December 13 declined by 934,000 barrels, compared to a fall of 1.7 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.425 million barrels.

WTI Oil FAQs

What is WTI Oil?

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

What factors drive the price of WTI Oil?

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

How does inventory data impact the price of WTI Oil

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

How does OPEC influence the price of WTI Oil?

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

Source: FXSTREET

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Daily News

Remarks of Officials

Central Bank

Forex

FastBull Events

FastBull Featured

Devin

Mohammad Omar

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

FOMC Meeting Round-up: Where are U.S. Dollar, Gold and Japan 225 Headed?

FOMC meeting round-up

Takeaways

U.S. dollar at highest level since November 2022

Gold prices dipping below support confluence

Japan 225 back to retest lower trendline of ascending triangle

Asian Shares Track Wall Street's Selloff After Fed Hints at 2 Rate Cuts in 2025

Sources: yahoo finance

December 2024 FOMC Review: A Cut Now, A Skip Next

BOJ Stands Pat as Ueda Bides Time Until Next Rate Hike

Sources: Bloomberg

December 19th Financial News

[Quick Facts]

[News Details]

[Today's Focus]

Nasdaq Bounce or Break? 21340 Becomes the Battleground

Nasdaq respectful through the rout

Monumental hawkish shift? Really?

WTI Posts Modest Gains To Near $69.50 As US Crude Stocks Fall

WTI Oil FAQs

Source: FXSTREET

Risk Disclosure