Oil prices provoke political jitters

andres del risco

Oil reserves were the focus of global markets yesterday as rumours that the Obama administration were ready to tap the Strategic Petroleum Reserve in order to allow pump prices some room to fall caused big shifts in the value of crude. While we have been seeing record prices in oil in euro and sterling terms, the same cannot be said for the price in US dollars, so the timing does seem somewhat strange. The politics of using the SPR are difficult in the US and the administration was quick to deny it at this point; it will become a weapon against higher prices however, should the Iranian situation continue to provide oil a price floor.

Equities remained in rally mode too yesterday, although the exuberance is looking a little strained. Risk was helped by fresh data from the US that the jobs market was still in fine fettle with initial jobless claims remaining at 4 year lows (351k vs 357k expected) while the Empire manufacturing survey, a poll of manufacturing businesses in New York state, rose unexpectedly. The S&P 500 now finds itself above the 1400 mark for the first time in 4 years but signs are that this could be a near-term high; we will have to wait and see.

In currencies, GBP managed to shake off the effects of Fitch’s credit outlook downgrade announced on Wednesday. The reports overnight that the Chancellor is ready to dump the 50p tax rate have also had little effect; for our thoughts on why we think the Chancellor should keep the higher rate of tax you.The pound remains at the behest of risk flows at the moment and with people looking for a slump in equities following profit-taking overnight we could see the pound offered into the weekend.

News from the Eurozone has been minimal of late although Greece had EUR28bn of bailout money from IMF approved yesterday. Now comes the really hard work, implementing the fiscal plans that the troika have laid out whilst keeping the general public from starting a revolution against the hand of austerity. You do not need me to tell you that the Greek situation is not over by a long chalk.

The US CPI number will be the main focus this afternoon. Recent noises from the Fed suggest that they are more worried about commodity price inflation compared to increases in wages, so it will be interesting to see whether recent oil tension have started to manifest in consumer prices as well as those of producers. The US yield curve has started to rise as well in recent days, and despite still being at historically low levels, shows that the Fed’s plans of keeping yields low to stimulate demand may need further impetus later down the line. CPI is released at 12.30.

We also have February industrial production at 13.15 which is expected to rise by 0.4% while later, Michigan confidence for March is also expected to improve from 75.3 to 76.0.

Indicative Rates Sell Buy
GBPEUR 1.2025 1.2051
GBPUSD 1.5711 1.5736
EURUSD 1.3052 1.3076
GBPJPY 131.51 131.79
GBPAUD 1.4937 1.4964
GBPNZD 1.9203 1.9232
GBPCAD 1.5613 1.5642
NZDUSD 0.8172 0.8194
GBPZAR 11.99 12.04
USDZAR 7.6282 7.6582
GBPPLN 4.9552 4.9817
EURJPY 109.22 109.49

Rates are dependent on amount transacted. Please call for a live rate quote

Company Details

Oil prices provoke political jitters

Get a quick quote

Open Account with Currencies Direct

Currencies Direct are located at:
51 Moorgate,, Greater London,, , EC2 R6BH, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882