Gold and Crude Oil prices declined this week

Lebanese Forex Market

The Lebanese Pound (LBP) remained steady within the new official rate of USD/LBP 15,000 by June 23^rd, 2023.

On the parallel market, the Lebanese national currency remained steady this week with an average of 93,261 LBP/USD. The pair LBP/USD recorded a minimum of 93,200 LBP/USD and a maximum of 93,300 LBP/USD during the course of this week. The Lebanese Lira remained steady due to Sayrafa interventions by the Central Bank.

As for the Euro/LBP currency pair, the Euro depreciated against the dollar-pegged LBP with the currency pair going down from last week €/LBP 16,405.5 to €/LBP 16,300.5 by June 23, 2023. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound went up by 2.04% weekly to stand at 128.78 points on June 23, 2023.

International Forex Market

This week, the US dollar bounced back against major currencies as the dollar index increased by 0.74% on a weekly basis to 102.998 on June 23, 2023. In fact, Fed Chair Jerome Powell stated that the majority of policymakers are in favor of more interest rates this year; the focus of the central bank is to bring down inflation to 2% but it has a long way to go.

The Euro depreciated against the dollar by 0.64% to $1.0868. The European Central Bank (ECB) raised borrowing costs last week and signaled another rate hike was probably coming in July. In fact, ECB President Christine Lagarde has already confirmed a rate hike in the July meeting as inflation has been confirmed above 6%. Although, price pressures have decelerated heavily the past months, however they are still thrice the required rate of 2%.

The British pound also depreciated against the US dollar by 0.86% to stand at $1.2707 by the week ending June 23, 2023. In fact, although falling energy prices offered a brief moment of optimism, the UK has been pulled back into the political and economic throes of a cost-of-living crisis. The dream of a soft landing that would have the Bank of England squeeze out inflation without condemning the country to a recession looks increasingly remote. Inflation is cooling only slowly, forcing the central bank to go hard on Thursday with a bigger-than-expected hike that took the key rate to 5%. Markets believe the only way to curb prices will be to go even further and push rates to levels not seen in more than two decades. However, rising mortgage payments are squeezing the finances of millions of borrowers in Britain, threatening to undermine household spending and the broader economy. Moreover, Rocketing interest rates and inflation drove UK government debt above 100% of GDP for the first time since 1961, dealing a blow to Prime Minister Rishi Sunak’s pledge to get it falling and denting hopes for tax cuts in the build up to an expected general election next year.

This week, the USD/JPY increased by 0.81% to reach 142.97 by June 23, 2023. Elsewhere, the Australian dollar depreciated by 2.66% on a weekly basis to stand at 0.6692 AUD/USD by June 23, 2023. In contrast, the Canadian dollar appreciated by 0.05% on a weekly basis to reach CAD 1.3193 for a US dollar.

Commodities

Gold markets retreated this week amid a stronger dollar, with gold prices decreasing by 2.01% to $1918.55/ounce. In more details, gold drifted lower under pressure from higher Treasury yields after Federal Reserve Chair Jerome Powell reiterated on Thursday that one or two more rate hikes would be needed this year. That pushed the yield on two-year Treasuries to a three-month high, a headwind for gold, which doesn’t offer interest. The precious metal has fallen about 7% since rising to near a record high in late May. As well as the outlook for higher interest rates, it’s lost some haven demand as fears of a US regional banking crisis eased.

This week, crude oil prices experienced a decrease of 4.93%, reaching $68.24 per barrel. Looking ahead, oil prices are expected to remain within a specific range in the second half of the year. The OPEC+ alliance aims to maintain a minimum price floor, likely above $70 per barrel, by limiting production. However, potential recessions in the United States and Europe could prevent prices from exceeding $90 per barrel. Throughout the first half of the year, the market remained balanced due to resilient Russian output, increased Iranian flows, and a slower-than-anticipated recovery in demand. Nevertheless, OPEC+’s substantial production cuts are expected to tighten supply in the second half, creating a more favorable environment for higher prices.