Oil prices have fallen slightly throughout the night as reports emerged of The U.S closing in on a deal to gain access to Venezuelan oil reserves, with the signing of the deal by the U.S government imminent. Oil markets are understandably on edge over any increases in supply, with the potential knock-on effect seeing oil prices tumbling further. This followed reports that Venezuela is considering leaving OPEC, making this the second major exit after the UAE also said it would leave.
Elsewhere, the Jackson Hole conference move into its second day with markets eagerly awaiting any remarks from Fed Chair Kevin Warsh. Markets are currently pricing in a 35% chance of a rate hike next month, whilst the possibility of a hike by December has risen to 75%. We’ve also seen the Australian Dollar climb to a 3-month high against The US Dollar after stronger inflation figures earlier this week has effectively paved the way for another interest hike this year by the Bank of Australia.
Germany’s 10-year government bond yield climbed to 3.275% earlier this morning, reaching its highest level since 2011. ECB Executive member Isabel Schnabel warned earlier this week that borrowing costs would need to rise further in order to bring inflation back to their 2% target in the medium term. As a result, markets are now fully pricing in a 25-basis point interest rate hike in their September meeting.
Sticking with Europe, we have Consumer Confidence and Economic Sentiment figures due out at the top of the hour. Looking at the release in isolation, an improved figure would provide some positivity for the Euro, however it would still be below what is regarded as normal sentiment. Measured at 100.
GBP/EUR 1.1645 GBP/USD 1.3671 GBP/AED 4.9863
GBP/AUD 1.8897 GBP/CHF 1.0934 GBP/CAD 1.8842
GBP/NZD 2.2836 EUR/USD 1.1640 GBP/ZAR 21.6774