Oil prices have again continued climbing this morning, reaching $100 per barrel for the first time since July as the conflict in the Middle East continues with attacks having taken place on oil infrastructure and tankers. The recent continuation of attacks has led to comments from US Secretary of State Marco Rubio warning that both parties are still some distance from talks resuming. Alongside this, Goldman Sachs has now warned that oil prices could climb to as high as $120 per barrel if these attacks intensify.
Elsewhere, the Japanese Yen has held firm near a seven-month high against the Dollar, as expectations now ramp up for a 25 basis-point hike in the Bank of Japan’s policy meeting next week.
Euro-Zone bond yields are also sitting at multi-year highs as a fresh surge in energy prices threatens to send inflation soaring across the globe. Germany’s 10-year bond is also trading close to its highest level since August 2011, whilst two-year bonds are also closing in on their highest levels for 2 years with markets now anticipating an interest rate hike from The European Central Bank. As it stands, markets are fully pricing in a 25-basis point hike as energy import costs continue to climb.
Turning our attention to the economic calendar for today, this morning we have seen Machinery Tool Orders in Japan show healthy gains, with orders from manufacturers increasing by nearly 15% last month. So positive for Japan as a whole, but not so great if you are buying The Yen.
Attention otherwise pretty much focuses on the European Central Bank’s interest rate decision tomorrow, not necessarily for tomorrow’s decision but for comments about future rate hikes throughout the back end of this year as energy prices are continuing to climb to new highs.
GBP/EUR 1.1635 GBP/USD 1.3520 GBP/AED 4.9674
GBP/AUD 1.8756 GBP/CHF 1.0961 GBP/CAD 1.8657
GBP/NZD 2.3155 EUR/USD 1.1604 GBP/ZAR 21.7334