Oil Prices Sink to Lowest Level in 2024 and Investors’ Focus Turns to U.S. jobs data

Lebanese Forex Market

_{*Prices are as of the time of writing this report}

The Nominal Effective Exchange Rate (NEER) of the Lebanese pound decreased by 0.18% this week against a basket of 21 influential currencies, including the US Dollar and Euro, and recorded 229.57 points on September 6^th, 2024. Since the start of the year, we notice that the NEER Index fell by 4.7%. The decline is attributed to the US Dollar’s sharp decline this year, which led to a decrease in the Lebanese Lira’s valuation against other currencies since the Lebanese Lira’s conversion rate to the US Dollar has been stable since January 2024.

International Forex Market

_{*Prices are as of the time of writing this report}

In international currency markets, the US Dollar index, a measure of the US currency’s strength against a basket of six rivals, decreased by 0.76% this week to 100.96 points. The index trades near a one-week low as investors await U.S. jobs data that could indicate the size of the expected rate cut this month by the Federal Reserve. A decrease in interest rates is usually correlated with a decline in the US Dollar’s performance.

The Euro slightly increased against the dollar in line with the dollar index’s decline. This move is despite traders betting on the ECB cutting interest rates in its September meeting after preliminary figures indicated that inflation in the Eurozone decreased to 2.2% in August, the lowest level since July 2021.

The Japanese yen strengthened against the dollar to equal 142.44 JPY for 1 US Dollar compared to 146 JPY last week as the Bank of Japan used a more hawkish tone on interest rates and as markets await signs on the Fed’s size of interest rates cuts in its next meeting. Lower US borrowing costs are usually correlated with an appreciation in the Yen’s valuation compared to the US Dollar.

Commodities

 _{*Prices are as of the time of writing this report}

In commodity markets, both oil benchmarks fell to their lowest level this year amid weak demand fears from major oil markets as the two biggest economies’ manufacturing sectors deteriorated in August. The weaker than expected PMIs raised concerns about worsening economic conditions and negatively affected oil demand outlook. At the same time, supply concerns eased following signals of a potential resolution to Libya’s dispute. However, oil prices got some relief from OPEC+’s announcement to delay production increase for at least two months, and from the US crude stocks’ decline by 6.9 million barrels last week, compared to market expectations of a 1.1 million decrease only.

Brent crude, the global oil benchmark, fell 5.39% this week to $72.78 a barrel and West Texas Intermediate, the US equivalent, slipped 5.87% during the same period to $69.23 a barrel.

As for metal markets, Gold increased by 0.64% this week to $2,519 per ounce on Friday, as traders focus on U.S. jobs data that could signal the Fed’s interest rate cut size and as the US Dollar weakened. Lower interest rates are usually correlated with a better performance for gold.

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