- Investors have already priced out March and see scant chance of a hike at all this year, which makes that consensus vulnerable to any hint of hawkishness in the minutes.
Caution helped the dollar hold firm on a basket of currencies at 96.956 .DXY, after rising 1 percent on Tuesday. It was steady on the yen at 114.25 JPY=, after finding support around 113.60.
The big loser was sterling, which has struggled so far in 2016 because of worries the UK might leave the euro zone.
- On Tuesday, the Fed's Neel Kashkari said he sees a gradual increase in interest rates, while Philadelphia Fed President Patrick Harker said the Fed may be wise to await more evidence of higher U.S. inflation before raising rates again.
Boston Fed President Eric Rosengren said the central bank should be "unhurried" as it considers when to again hike interest rates given problems overseas and financial market volatility.
- There was renewed hope yesterday about the possibility of a rise in oil prices as the world’s top oil producers, Russia and Saudi Arabia, agreed to a production output freeze to tackle oil glut, as long as other countries are ready to do same.
Other producers such as Qatar and Venezuela have also expressed their readiness to keep oil production at January’s levels if other producers also do the same.
Benchmark Brent oil prices fell 2 percent on Tuesday to below $33 per barrel on concerns that Iran may reject the deal and that even if Tehran agreed it would not help ease the growing global glut. [O/R]
- It could become the first joint OPEC and non-OPEC deal in 15 years, aimed at tackling a growing oversupply of crude and helping prices recover from their lowest in over a decade
Iranian Oil Minister Bijan Zanganeh also indicated Tehran would not agree to freezing its output at January levels, saying the country would not give up its appropriate share of the global oil market.
- The fate of the first global oil deal in 15 years could be decided on Wednesday when OPEC members travel to Iran to persuade the country to participate in a deal to freeze output levels, possibly by offering Tehran special terms.
- “Saudi Arabia, Opec’s largest producer, has said it will only talk about paring back its own supply if nations outside the group also agree to step back from the pumps.
But analysts said the prospect of a production cut remained distant, as it was weaker Opec members such as Venezuela, rather than Riyadh, that were pushing for an emergency meeting as soon as this month.
“These calls have been ignored by Saudi Arabia and other [Gulf] members time and time again,” said analysts at Energy Aspects.”
Reference: Reuters, Leadership, The National, Energy Aspects
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