[Market Morning] EU Agrees to Embargo some Russian Oil Fed Officials Hawk Again, 50bps Rate Hike Should be Discussed at Every Meeting Unless Inflation Slows Sharply
Oil prices are also supported by a continued weakening of the U.S. dollar as Asia eases coronavirus lockdowns, Europe and the U.S. usher in the peak summer travel season, demand is expected to improve, and traders digest expectations that the European Union will eventually agree on a ban on Russian oil imports. Brent crude oil broke through the 120 integer mark, reaching a maximum of 122.01 US dollars per barrel. The U.S. dollar index hit a low of 101.29 on Monday, the lowest since April 26. The improvement in global market risk appetite suppressed the safe-haven demand for the U.S. dollar, and the market’s expectations for the Federal Reserve to suspend interest rate hikes in September increased.

On Monday, spot gold opened lower and moved higher. At the beginning of the Asian session, the short-term increase was more than 6 U.S. dollars. It tested the US$1,860 mark several times in the day but fell back after being blocked and finally closed up 0.34% at US$1,856.18 per ounce; spot silver fluctuated downward and finally closed. It was down 0.2% at $22 an ounce.
Comment: Gold prices held firm on Monday, trading in the 1848-1864 range, driven by the dollar's depreciation, while investors lowered expectations for further aggressive monetary tightening in the United States. U.S. gold futures were up 0.04% at $1,858. Gold prices are likely to fall for the second consecutive month. Gold could gain further if concerns about the economy weigh on yields further, with $1,870 being the first test, followed by $1,900. Sentiment remains extremely fragile, but as long as the focus is on a worsening economic outlook rather than pricing in more rate hikes, gold can continue to perform well.
Suggestion: long spot gold at 1851.70 positions, target point 1881.30.
The U.S. dollar index continued to pull back and finally closed down 0.285% at 101.37.
Comment: The dollar extended losses on Monday as risk appetite in various markets briefly strengthened by encouraging economic data and bets that the Federal Reserve will slow policy tightening. The index, which tracks the greenback against six major rivals, was on track for its first monthly decline in five months as the safe-haven greenback lost momentum after a strong start to the year.
Suggestion: EUR/USD 1.07720 position to go long, the target point 1.08150.
In terms of international oil prices, the two oil prices fluctuated upwards. WTI crude oil stood at $117/barrel, a new high since March 9, and finally closed up 2.22% at $117.64/barrel; Brent crude stood at $121/barrel, a new high since March 24, and finally closed It rose 2.07% to $121.67 a barrel.
Comment: Due to the U.S. public holiday, trading was quiet. Brent crude climbed above $120 a barrel on Monday, hitting a fresh two-month high of $122.01, as Asia eased coronavirus lockdowns and traders digested expectations that the European Union will eventually agree on a ban on Russian oil imports.
Suggestion: long U.S. crude oil at 116.352, and the target point is 118.410.
Most of the major European stock indexes closed higher. The Stoxx Europe 50 closed up 0.86% at 3841.62 points; Germany's DAX30 closed up 0.79% at 14575.98 points; the UK's FTSE 100 closed up 0.19% at 7600.06 points.
Comment: The stock market generally rose, led by technology stocks, up 2.0%. However, trading was light as U.S. stocks were closed for the Memorial Day holiday. European shares hit their highest level in nearly a month on Monday, as optimism was buoyed by easing coronavirus lockdowns in Asia and adding fresh stimulus. Since mid-March, European stocks had their best week as upbeat U.S. consumer confidence data, signs of inflation peaking, and clarity on the Federal Reserve's plans calmed market participants.
Suggestion: Go long at 1834.30 of the European Stoxx 50 Index, with the target point 3909.90.
Fed's Waller: 50bps rate hike should be discussed at every meeting until inflation falls 'substantially'.
Fed Governor Waller said he supports a policy of 50 basis points more in the next few meetings. Fifty basis points should be the topic of every meeting until inflation falls "significantly."
E.U. leaders back push to sanction some Russian oil, temporarily exempt pipeline crude.
E.U. leaders agreed to impose a partial ban on Russian oil, paving the way for the sixth round of sanctions against Russia. At a summit in Brussels on Monday, two people familiar with the matter said the sanctions would ban the purchase of crude oil and oil products shipped from Russia by sea to E.U. member states but exempt pipeline crude for the time being.
European Council President Michel Michel said the sanctions cover more than two-thirds of Russia's oil exports to the E.U., which agreed to ban 90 percent of Russian oil imports by the end of 2022. The E.U.'s package (sanctions against Russia) includes removing Sberbank from SWIFT (Bank Settlement System).
Britain is in talks to reopen its largest gas storage site.
Britain is in talks to reopen its largest gas storage site, the Rough gas storage facility, as the Russia-Ukraine conflict threatens to deepen Britain's energy crisis this winter. Its natural gas storage capacity accounts for about 70% of the U.K.'s, and its operator Centrica announced in 2017 that it would permanently close it.
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