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September 8th - Billionaire Aliko Dangotes mega-refinery in Nigeria is operating at full capacity to maximize diesel and jet fuel supplies to Europe, capitalizing on soaring profit margins. Since the start of the war, Middle Eastern oil product supplies have plummeted, disrupting crucial diesel and jet fuel shipments to Europe, and Dangote has stepped in to fill the gap. Africas largest refinery reached full capacity shortly before the start of the US-Israel war against Iran on February 28th, enabling it to help compensate for the disruption in fuel supplies to Europe while profiting from the surge in earnings. This timing also demonstrates its profit potential ahead of its initial public offering on September 14th, the largest equity sale in Africa.On September 8th, Volker Treier of the German Chamber of Commerce and Industry stated that the setback in German exports in July stemmed directly from fluctuations in trade policy. Exports fell 0.8% month-on-month after five consecutive months of growth. He noted that a relatively weak global economy and increased competition are putting pressure on German exporters. However, exports to the US increased somewhat due to the Trump administrations announcement in July of a 10% tariff on EU imports. But Treier stated that the much-needed boost from an improved business environment for Germany and Europe has yet to materialize.On September 8, French Foreign Minister Jean-Michel Barrow announced that France would halt trade with Israeli settlements in the occupied Palestinian territories. France, along with the United Kingdom, Canada, Denmark, Spain, Finland, Ireland, Iceland, Norway, Poland, Portugal, and Sweden, issued a joint statement that day, committing to restrict trade with Israeli settlements. The joint statement said that the situation in the West Bank is rapidly deteriorating, with settler violence and settlement expansion reaching unprecedented levels. France, the United Kingdom, and Canada will propose national-level measures to ban trade with settlements. Barrow stated that France believes Israel must stop settlement expansion and related violence, and that France cannot support a situation that threatens the security of Israelis and Palestinians and regional peace and stability through trade. He also called on the European Union to take corresponding measures.On September 8th, British Foreign Secretary Ed Miliband announced in the House of Commons a shift in the UK governments Middle East policy and new sanctions against Israeli settlements in the West Bank. According to the measures announced by the British government, the UK will ban imports of goods from Israeli settlements in the West Bank and restrict British companies from providing certain services such as financing, construction, and advertising for new settlements.Geopolitical risks in the Middle East escalated sharply, causing WTI crude oil to surge past $92. A chart provides a quick overview of the pre-market conversion of domestic and international crude oil prices.

Investor attention is on the Fed's minutes as recession fears drive the US Dollar Index towards 107.00

Daniel Rogers

Aug 16, 2022 11:47

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The US Dollar Index (DXY) rises for a third day in a row during Tuesday's Asian session, gaining bids to 106.58. Thus, the greenback's signal captures the market's rush for risk-free assets in response to worries about the US and China's economies as well as worries about geopolitics in the Middle East, China, and Russia. It is noteworthy that aggressive Fed remarks and weaker US data enhance market trepidation and help DXY bulls.

 

Despite this, the DXY bulls closely monitor the gloomy statistics coming out of China and the US, particularly in light of the recession fears.

 

In August, the US NY Empire State Manufacturing Index fell from 11.1 in July to 31.3, below market estimates of 8.5. The August NAHB homebuilder confidence index in the US fell from 55 to 49, the lowest level since the start of 2020.

 

In other news, China's retail sales slowed in July to 2.7% YoY from 3.1% earlier and 5.0% forecast, while industrial production (IP) fell to 3.8% from 3.8% previously and 4.0% market estimates. Additionally, in an effort to counter bearishness, the People's Bank of China (PBOC) shocked the markets on Monday by reducing the rates on its medium-term lending facility (MLF) by 10 basis points (bps).

 

It should be emphasized that news stories about deteriorating coronavirus conditions in Shanghai, China's financial center, and the restart of Russian bond trading on Wall Street did not spur investors' desire to take risks. The Wall Street Journal's (WSJ) rumors of a potential meeting between US Vice President Joe Biden and his Chinese counterpart Xi Jinping may also encourage investors to take more risks. In a similar vein, Chinese President Xi proposed new efforts to revive the second-largest economy in the world.

 

The Pentagon said on Monday that the US, South Korea, and Japan took part in a missile warning and ballistic missile search and tracking exercise last week off the coast of Hawaii. Between August 22 and September 1, the US and South Korea will collaborate on military drills. The DXY rises as a result of the additional stress that geopolitical worries place on market sentiment.

 

The three-day downtrend in US 10-year Treasury yields is around 2.775%, while S&P 500 Futures are down at least 0.13 percent day-to-day.

 

Moving on, the secondary US housing and activity data released today should be of interest to DXY traders ahead of the release of the FOMC Minutes on Wednesday. The dollar's gauge might remain on the bear's radar if US data keep getting worse.

 

The three-week-old resistance line, which is now support at 106.35, would need to be broken for an extended period of time for DXY bulls to hit the monthly high above 107.00. However, in order to approach July's yearly high close to 109, the bulls need confirmation from late July's peak at 107.45.


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