The US dollar completed a round trip this week, continuing its relentless rise against most currencies early in the week, but then started to fall back from Wednesday afternoon and is now a touch lower than where it started. Predictably, this weighed on the prices of many commodities, such as crude oil, early in the week, but lifted them later on.
Sticking with oil, OPEC+ meets on Wednesday and is reportedly considering a cut to its oil output target of 0.5-1m bpd from November, after previously agreeing to a 0.1m bpd cut from October. Presumably, the group is concerned about prices taking another leg down since their last meeting, and demand weakening as the global economy looks set to tip into recession. However, many OPEC+ members are producing far less oil than their quotas. As a result, the actual hit to supply will be markedly lower than the headline cut to the group’s quota.
Elsewhere next week, commodity prices will continue to take direction from developments in Ukraine and Western sanctions on Russia. Data wise, the US ISM manufacturing PMI for September comes out on Monday and US non-farm payrolls for September are out on Friday. We expect both to weaken from August; we forecast the PMI to fall from 52.8 to 52.0, and non-farm payroll growth to slow from 315k to 275k.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services