Brent settles at eight-week nadir amid negative pressures
International benchmark Brent rose in American trade on Monday away from eight-week lows on short-covering.
The gains come despite mounting pressures, with ongoing US-Russia talks to end the war in Ukraine, which could result in the US removing its sanctions on Russian crude exports.
Prices
Brent rose 0.7% today to $74.72 a barrel, with December 31 lows at $74.15.
Brent fell 3.1% on Friday, the first loss in five days, and the heftiest this year on concerns about global oversupply.
Global oil prices lost 0.4% on average last week, the fifth weekly loss in a row.
US-Russian Talks
US President Donald Trump started talks with Russia on a peace deal without inviting Ukraine or the EU to the table, with Russian and US teams planning more discussions this week.
Ukrainian President Zelensky said he’s prepared to resign if it meant peace to the country, with officials saying EU leaders will convene at an emergency summit in March to discuss additional support for Ukraine.
The US and EU sanctions on Russian exports hampered their maritime crude supplies and spiked prices.
Iraq Supplies
Iraqi officials said on Sunday Iraq will export 185 thousand bpd from the Kurdistan fields through the Iraq-Turkey pipeline once shipments resume.
Otherwise, prices are pressured by US President Trump’s assertions that the US will increase output, while he heaps pressure on Iraq to resume oil exports from its Kurdistan fields to boost global supplies and cut prices.
US dollar skids to two-month trough on weaker US yields
The US dollar tumbled in European trade on Monday to a two-month lows against a basket of major rivals, resuming losses after a short hiatus as US 10-year treasury yields weakened.
Recent US data showed a surprise contraction in the services sector, indicating slower growth in the first quarter and renewing hopes for a Fed rate cut in June.
The Index
The dollar index fell 0.5% today to 106.13, the lowest since December 10, with a session-high at 106.66.
On Friday, the index rose 0.3% after marking the biggest daily loss in a week on the previous day.
The index lost 0.2% last week, marking the third weekly loss in a row as investment demand waned off.
US Yields
US 10-year treasury yields fell 0.25% on Monday on track for the fourth loss in a row, trading near two-week lows at 4.406% and boosting non-yielding assets.
It comes after data showed a surprise contraction in the US services sector in February in another sign of economic slowdown in the first quarter.
US Rates
According to the Fedwatch tool, the odds of a Fed March interest rate cut stood at just 2.5%.
Bow investors await crucial US GDP and consumer spending data later this week, in addition to speeches by several Fed officials.
Gold resumes gains near record highs
Gold prices rose in European trade on Monday, resuming the gains after a short hiatus on Friday and approaching record highs once more on haven demand due to concerns about Trump’s tariffs.
Prices are also boosted by current weakness in US 10-year treasury yields as traders await more data and remarks by Fed officials to gather clues on the path ahead for monetary policies.
Prices
Gold prices rose 0.45% today to $2948 an ounce, with a session-low at $2921.
On Friday, gold lost 0.1%, moving away from a record high at $2954.
The precious metal rose 1.9% last week, marking the eighth weekly profit in a row, and the longest such streak of weekly gains since June 2020.
Trump’s Tariffs
US President Donald Trump announced plans to impose a 25% tariff on all car imports to bolster the US economy and reduce the trade deficit, with the tariffs expected to be implemented on April 2nd.
It comes ahead of anticipated talks between the European Trade Commissioner and Trump’s trade officials to discuss to avoid an all-out trade war.
Trump has previously threatened a 20% tariff on European car imports in 2018.
US Yields
US 10-year treasury yields fell 0.25% on Monday on track for the fourth loss in a row, trading near two-week lows at 4.406% and boosting non-yielding assets.
It comes after data showed a surprise contraction in the US services sector in February in another sign of economic slowdown in the first quarter.
US Rates
According to the Fedwatch tool, the odds of a Fed March interest rate cut stood at just 2.5%.
Bow investors await crucial US GDP and consumer spending data later this week, in addition to speeches by several Fed officials.
SPDR
Gold holdings at the SPDR Gold Trust rose by 20.66 tons on Friday to a total of 904.38 tons, the highest since August 2023.
Euro rushes to one-month high as Conservatives win German elections
Euro rallied in European trade on Monday against a basket of major rivals, resuming gains against the dollar and hitting a month high after Conservatives won the German elections as expected.
The Conservatives leader Friedrich Merz, set to become the next German chancellor, announced plans to form a coalition government as soon as possible to face the ongoing international challenges.
The Price
The EUR/USD pair rose 0.7% today to $1.0528, the highest since January 27, with a session-low at $1.0456.
The pair closed down 0.4% on Friday on risk aversion before German elections.
German Elections
Initial results showed the Conservative Party won the elections and got first place, followed by the far-right Alternative for Germany party in second place as expected.
The Conservatives got 28.52% of the vote in first place, followed by the AFD party at 20.8% of the total vote.
The Socialist Democratic Party fell to third place at 16.41%, its worst election result since 1949.
A New Coalition
German Chancellor Olaz Shultz conceded his defeat, while Friedrich Merz announced urgent plans to form a coalition as soon as possible.
The markets were relieved with the results, as they matched expectations very closely with no surprises.
Investors expect the upcoming centrist government to support business-friendly policies and boost investments even further.