Look Ahead 11/8/23: UK Q2 GDP; US Michigan Consumer Sentiment; Baker Hughes oil rig count

(Video Transcript)

Fed not expected to raise interest rates

Hello and welcome to IGTV. I'm Angeline Ong, and this is your Look Ahead to 11 August 2023. We start off with second-quarter gross domstic product (GDP) numbers out of the United Kingdom. These are the preliminary figures. Just checking in on cable for you.

This is quite a US dollar story this session, because the dollar, let me show you how the one-minute charts, fell after data showed that US consumer prices rose moderately last month, while initial jobless claims gained in the latest week.

Now, all this reinforcing expectations that the Federal Reserve Bank (Fed.) will not raise interest rates at the next policy meeting. Cable will still be in focus because we've got industrial production figures and trade balance figures as well for June out of the United Kingdom.

Is the US due for a reset?

From the US, more inflation figures, this time producer price index, and also a reading on the consumer in the US.

There is this expectation that somehow or another the US economy may have achieved a soft landing. But then there are market watchers, fund managers and CEOs out there too that are from a different school of thought, and that a correction or a reset is still incoming.

US consumer prices rose moderately in July, just an update of the figure we got earlier, whilst weekly jobless claims came in above expectations.

Now, these figures, although it is an increase to the annual consumer price index (CPI) rate, which picked up for the first time in 13 months, was calculated from a lower base after prices subsided last July. This is after a jump that boosted inflation to a pace not seen in more than 40 years.

Brent crude prices stabilised

Now, the other key thing to watch out for will be the Baker Hughes oil rig count, just pulling up the oil picture for you here. This is a chart of US crude. Oil stabilised, prices stabilised rather this session with Brent crude, holding close to January high.

So let's have a look at Brent there for you. This was on speculation that another US interest rate hike has faded after those benign inflation data points out earlier in the session. Also, Organisation of the Petroleum Exporting Countries (OPEC) remaining positive on the demand outlook for oil.

Both Brent and WTI, just showing you WTI again here, have been on the rise in the last few sessions. However, US inflation data is key because all this feeds into the US economic outlook.

And also, the China demand picture is also important because if we see a continued support in terms of demand, then we could see these prices perhaps tick higher. I'm just showing you the daily chart here because it will give you a slightly different picture.

If you look at this, it shows you that oil has been slowly ticking higher since the end of June. And, as I mentioned, if demand remains in play at current production levels, we could potentially see prices grind higher unless both the demand and supply outlook change quite dramatically.