Forex News
A Reuters poll revealed that all economists expect that the Mexican Central Bank, also known as Banxico, will hold rates unchanged at 6.50% for the third straight meeting.
In Banxico’s monetary policy statement, it is expected to cite that inflation risks are tilted to the upside, but the tone is projected to keep the central bank’s neutral stance unchanged.
Regarding the economy, the statement is projected to indicate that growth risks are tilted to the downside, with the board acknowledging the Fed’s tightening cycle and its implications for the USD/MXN exchange rate.
Median forecasts indicate that Mexico's key rate is expected to stay unchanged until at least the second half of 2028.
Regarding the future of Mexico’s interest rates, 8 of the 13 poll respondents foresee another rate cut, while 5 see rates remaining steady.
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
The Bundesbank President and European Central Bank (ECB) member Joachim Nagel crossed the wires at a financial event in London on Tuesday, where he acknowledged that high energy prices had driven inflation off its 2026 target.
Nagel added that he is not concerned about the labour market and added that “rates are still in neutral territory,” and recognized that he can’t exclude the possibility that the EC needs to turn mildly restrictive.
Key highlights:
I am not so concerned about labour market developments
We are conducting monetary policy in between constructive ambiguity and forward guidance
I do not see too much uncertainty in markets about what drives our decision making
ECB rates are still in neutral territory, cannot exclude that we will need to go into mild restrictive territory
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.17% | -0.02% | 0.21% | 0.03% | -0.24% | -0.09% | |
| EUR | -0.14% | 0.03% | -0.13% | 0.08% | -0.11% | -0.35% | -0.22% | |
| GBP | -0.17% | -0.03% | -0.19% | 0.04% | -0.14% | -0.41% | -0.25% | |
| JPY | 0.02% | 0.13% | 0.19% | 0.22% | 0.05% | -0.24% | -0.06% | |
| CAD | -0.21% | -0.08% | -0.04% | -0.22% | -0.17% | -0.44% | -0.27% | |
| AUD | -0.03% | 0.11% | 0.14% | -0.05% | 0.17% | -0.27% | -0.10% | |
| NZD | 0.24% | 0.35% | 0.41% | 0.24% | 0.44% | 0.27% | 0.16% | |
| CHF | 0.09% | 0.22% | 0.25% | 0.06% | 0.27% | 0.10% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- USD/MXN clears 100-day SMA as Peso losses reach third day.
- Fed hike narrows Mexico-US rate advantage to 2.5%.
- Banxico hold expectations and hawkish Fed rhetoric favor Greenback.
The Mexican Peso extended its losses for the third straight trading session on Tuesday, down over 0.4% as investors reduce their exposure to the Mexican currency following last week’s Federal Reserve (Fed) decision to raise interest rates. At the time of writing, the USD/MXN trades at 17.29, clearing the 100-day Simple Moving Average (SMA) at 17.26.
Narrower rate differential, soft retail sales pressure Mexican Peso
Last Wednesday, the Fed increased the fed funds rate by 25 basis points to the 3.75-4.00% range, while rates in Mexico remained anchored at 6.50% after the Bank of Mexico (Banxico) finished its easing cycle. Therefore, the interest rate differential between Mexico and the US has narrowed to 2.50% in favor of the Mexican Peso, its lowest level since 2015.
The 6.50% interest rate differential reached in February 2023 favoured the Mexican Peso, which fell to its lowest level as USD/MXN hit its April 2020 high of 25.78. After this, the exotic pair reversed course, falling to its lowest level in almost nine years in April 2024 at 16.26.
Aside from this, data from Mexico showed that August’s Retail Sales improved from a -0.2% MoM contraction to -0.1% but missed estimates of a 0.2% expansion. In the 12 months to August, it decelerated from 2.9% to 1.8%.
In the meantime, hopes for an end to hostilities in the Middle East shifted market sentiment, but the Mexican Peso failed to gain traction as Banxico is expected to hold rates unchanged at the September 24 meeting. Additionally, hawkish commentary by Fed officials is setting the stage for another rate increase. If not by October, then by the December meeting another rate hike is expected with odds standing at 90%, according to Prime Terminal.
Richmond Fed President Thomas Barkin said inflation would take time to ease and more rate hikes might be needed to reach the 2% goal. Boston Fed President Susan Collins supports a hike, warning of high inflation risks and a greater chance inflation stays above 2%.
Up next, the Mexican economic docket will feature the Banxico Interest Rate Decision. In the US, Flash PMIs, jobs data, consumer sentiment and Fed speaking would be the catalysts for the USD/MXN pair.
USD/MXN price forecast: Technical outlook
In the daily chart, USD/MXN trades at 17.2914, extending its recovery above the latest reading of the 50/100/200-day simple moving average cluster at 17.1558, which now acts as underlying support and tilts the near-term bias bullish. Price is still well below the two descending resistance trend lines drawn from 18.1651 and 21.0808, suggesting the broader downtrend remains intact even as the pair rebounds. The Relative Strength Index (14) at 65.1 sits in bullish territory but shy of overbought, hinting that upside momentum is strong yet not extreme.
On the topside, initial resistance is seen near the nearer downward trend-line reference at 18.1651, ahead of the higher structural barrier around 21.0808, where prior selling pressure originated. On the downside, immediate support is provided by the multi-period simple moving average cluster at 17.155, with a stronger horizontal floor emerging at 16.8866. As long as USD/MXN holds above these levels, pullbacks are likely to be treated as corrective within the current bullish phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Commerzbank reports South Korea’s exports for the first 20 days of September jumped 78.3% year-on-year, extending nine months of double-digit growth and led by a 259% surge in semiconductor exports. The strong data underpins the Bank of Korea’s (BoK) confidence in growth, with the central bank expected to keep its policy rate at 3.0% while maintaining a hawkish bias at the 22 October meeting.
Record exports and steady policy rate
"South Korea's exports in the first 20 days of September surged 78.3% yoy vs 56.0% in August, marking a record high and extending double-digit growth to a ninth consecutive month."
"Overall, the strong early export data validates the Bank of Korea’s (BoK) positive assessment of the nation's economic growth. In the August meeting minutes released last week, the Monetary Policy Committee was seen as particularly confident that the economy could withstand further monetary tightening to stem growing inflationary pressures."
"However, recent KRW stability should lessen the near-term need for further rate hikes. Therefore, BoK is expected to maintain its hawkish bias while keeping the policy rate unchanged at 3.0% at its 22 October meeting, allowing policymakers more time to assess the lagged effects of past tightening on economic activity."
"In FX, USD/KRW fell 1.1% to 1,371 yesterday, the first decline in six sessions. The move was likely driven by lower global crude oil prices and exporter dollar selling ahead of the Chuseok holiday on 25 September. Separately, the BoK tested 24-hour KRW settlement with four local banks participating."
"This marks a key step in KRW market liberalisation efforts aimed at improving access for foreign investors. Greater accessibility remains a key hurdle to South Korea's reclassification to developed market status, given that MSCI previously identifying restrictions in the KRW market as a key constraint."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
OCBC strategists Sim Moh Siong and Christopher Wong highlight that the Taiwan Dollar (TWD) has extended gains, briefly strengthening near 31.71 versus the US Dollar (USD), supported by strong foreign portfolio inflows and domestic equity outperformance tied to tech and AI themes. While these flows could translate into firmer TWD demand, resident outflows and potential smoothing are expected to temper the pace of appreciation.
Foreign buying and tech cycle aid TWD
"TWD extended its gains on Monday, briefly strengthening to near 31.71 (vs USD) before gains were partially pared. The move was supported by continued foreign portfolio inflows alongside gains in domestic equities."
"Foreign investors were net buyers of around USD372mn of Taiwan equities, extending the recent run of inflows following particularly strong buying late last week."
"The persistence of foreign buying is worth keeping a close watch. If renewed interest in the tech/AI theme continues to draw portfolio inflows, Taiwan’s strong export cycle may translate more visibly into TWD support."
"That said, resident outflows and potential smoothing should continue to temper the pace of TWD appreciation."
"Bullish momentum on daily chart intact but shows signs of waning while RSI turned lower. Some consolidation not ruled out. Support at 31.70/71 levels (21, 200 DMAs, 61.8% fibo retracement of 2026 low to high). Resistance at 31.83/86 levels (100 DMA, 50% fibo)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold fades from $4,376 as Treasury yields climb.
- Fed officials keep further tightening firmly on the table.
- US-Iran diplomacy reduces haven demand as Oil prices soften.
Gold (XAU/USD) price retreats from daily highs of $4,376 on Tuesday as US Treasury yields rise and the US Dollar continues to strengthen, with investors pricing in further Federal Reserve (Fed) tightening towards year-end. At the time of writing, XAU/USD trades at $4,337, down 0.14%.
XAU/USD retreats as rising yields and stronger Dollar curb haven demand
Sentiment turned optimistic as US President Donald Trump announced that US and Iranian delegations met in what he called a very productive meeting. On the Russia-Ukraine war, Trump said that he and Ukrainian President Volodymyr Zelenskyy are figuring out a way to end the conflict and added that Putin is willing to meet to end the war.
Bullion prices remained pressured following the Federal Reserve’s decision to increase rates last week, which triggered a cascade of hawkish comments by several policymakers.
Richmond Fed President Thomas Barkin said inflationary pressures will take some time to ease, adding that additional rate hikes may be needed to push prices toward the Fed’s 2% goal.
Earlier, Boston Fed President Susan Collins said she supported a rate hike and warned of elevated inflation risks, noting “an increased likelihood of future scenarios in which inflation remains notably above 2%.”
In the meantime, energy prices have edged lower since the beginning of the week, amid increasing hopes for an end to the US-Iran conflict.
Despite this, money markets continue to price in a 53% chance of a 25-basis-point rate hike by the Fed at the October 28 meeting. However, for the December meeting, the chances remain higher, at 90%, according to Prime Terminal.
The US 10-year Treasury yield rises by more than 1.6 basis points to 4.97%, a signal that investors expect the Fed to tackle inflation. Consequently, the US Dollar Index (DXY), which tracks the performance of the American currency against its peers, is up 0.17% to 100.59.
Even though the yellow metal fares well as an inflation hedge, it fails to gain traction amid high-interest-rate scenarios.
US data featured the ADP Employment Change 4-week average, which came in at 20K, up from the previous print of 16.75K.
Later in the week, the US economic schedule will feature S&P Global Flash PMIs, jobless claims, the University of Michigan Consumer Sentiment, and further Fed speakers.
XAU/USD technical outlook: Gold remains subdued inside a ‘bullish wedge’
Price action shows Gold drifting lower inside a ‘bullish wedge’, which could propel the yellow metal, initially towards the 200-day Simple Moving Average (SMA) at $4,541. But first, buyers must clear a downslope resistance trendline near $4,382 before testing $4,400. Up next lie key psychological levels like $4,450 and the $4,500 mark.
On the downside, XAU/USD's first support is the 100-day SMA at $4,316. If decisively cleared, it exposes the 50-day SMA at $4,301, before Bullion tumbles below the $4,300 mark. On further weakness, the next support is September’s 16 low of $4,235, ahead of $4,200.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
MUFG’s Michael Wan notes that improved risk sentiment and AI optimism around Meta’s Muse supported a slightly stronger Dollar and stable DM yields. He argues that Asia FX and rates could benefit from continued infrastructure build-out tied to AI, with value shifting toward applications and inference. MUFG remains positive on Asia’s AI story, expecting robust growth despite modest export slowing in 2027.
AI infrastructure backs Asia FX outlook
"For Asia FX and rates, this could mean continued strength in the infrastructure build-out, but with less focus on model training and continued shift towards the inference layer and also less focus on the most advanced chips as tech companies build for consumers."
"We continue to be positive on the AI story for Asia and our base case is for some modest slowing in exports in 2027 and importantly for overall growth to remain robust."
"We as such continue to like KRW, TWD, and to some extent the tech linked currencies in Asia such as MYR and SGD."
"CNY should also continue to do well with contained volatility ahead of the Trump-Xi summit."
"Risk sentiment improved, the Dollar was slightly stronger, while DM yields were stable, as optimism around Meta’s new personal assistant Muse boosted sentiment around the next phase of AI together with general positive tones out of US-China talks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The US Dollar (USD) has extended its recovery on Tuesday, climbing to new multi-week highs on the back of steady bets for extra Fed tightening, while increasing hopes of a potential deal to unlock the US-Iran-Hormuz conflict seem to have been ignored by market participants.
Here is what you need to know on Wednesday, September 23:
The US Dollar Index (DXY) climbed further north of its psychological 100.00 barrier, hitting new two-month tops amid the mixed tone in US Treasury yields across the curve. The preliminary S&P Global Manufacturing and Services PMIs for the current month will be the salient data release, seconded by the weekly MBA Mortgage Applications, the EIA’s weekly report on US crude oil inventories and the speech by the Fed’s Barr.
EUR/USD has come under extra selling pressure on Tuesday, adding to Monday’s decline and clinching fresh multi-week lows near 1.1430. The advanced S&P Global Manufacturing and Services PMIs for the month of September are due alongside the speeches by the ECB’s Vujcic and Lane.
GBP/USD has retreated to levels last seen in late July, around 1.3320, on the back of firm sentiment surrounding the Greenback. Across the Channel, market participants will closely monitor the release of the flash September S&P Global Manufacturing and Services PMIs.
USD/JPY has built on previous gains and posted gains for the third day in a row, remaining above the 157.00 hurdle. Next on tap on the domestic calendar will be the publication of the advanced S&P Global PMIs on September 24.
AUD/USD has built on Monday’s decline, briefly breaking below the 0.7100 support, or three-day troughs. Next in Oz will be the preliminary S&P Global PMIs.
Front-month WTI futures have lost further ground, breaching the key $90.00 mark per barrel to hit fresh three-week lows on the back of renewed hopes for a reopening of the Strait of Hormuz.
Gold has reversed its initial downbeat tone and traded with modest gains, always below the key $4,400 mark per troy ounce. The daily rebound in the precious metal has come despite a firmer US Dollar, always propped up by steady bets of further Fed rate hikes, and mixed US Treasury yields across the board.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann expect USD/CNH to edge lower intraday but stay confined to a narrow 6.6890–6.6960 range, with a clear break below 6.6890 seen as unlikely. Over one to three weeks, they see downside extending toward 6.6820 as momentum builds. On a one- to three-month view, they anticipate further gradual declines while the pair trades below the cloud near 6.7815.
Downward momentum points to lower levels
"24-HOUR VIEW: USD extended its decline from last Friday, dipping to a low of 6.6912. Downward momentum has increased, albeit just slightly. Today, we expect USD to edge lower, but it is likely to stay within a 6.6890/6.6960 range. In other words, it is unlikely to break clearly below 6.6890."
"1-3 WEEKS VIEW: In our latest update from last Friday (18 Sep, spot at 6.7035), we highlighted the following: “Downward momentum is building, and if USD breaks and holds below 6.7000, it could decline toward 6.6920. The likelihood of USD breaking clearly below 6.7000 will remain intact as long as USD holds below 6.7170 (‘strong resistance’ level).” USD subsequently broke below 6.7000 and yesterday, it declined further to 6.6912. Downward momentum continues to build, and USD could decline to 6.6820 next. On the upside, the ‘strong resistance’ level is now at 6.7020."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI Oil falls for a fifth straight day as traders assess fresh Middle East developments.
- Iran says the Strait of Hormuz could reopen within seven days if the US eases military pressure and lifts its port blockade.
- Trump’s remarks on productive talks with Iran add to expectations of a possible diplomatic breakthrough.
West Texas Intermediate (WTI) Oil extends its decline on Tuesday as traders assess fresh Middle East developments, keeping energy prices under pressure for a fifth straight day. At the time of writing, WTI trades around $89.50, near a two-week low.
Earlier on Tuesday, Oil came under heavy selling pressure after Kyodo News reported, citing a senior Iranian official, that Iran could reopen the Strait of Hormuz within seven days if Washington eases military pressure and lifts its blockade of Iranian ports.
Adding to the pressure on Oil, US President Donald Trump said on the sidelines of the UN General Assembly in New York that US officials had met with an Iranian delegation for three hours. Trump said “the Iran meeting went very well,” describing it as “very productive” and adding that another meeting is scheduled “in the near future.”
The developments have raised hopes that the Strait of Hormuz could reopen, where shipping remains heavily restricted. Only two commodity vessels crossed the waterway on Monday, down from 10 on Sunday and far below the roughly 125 large commercial vessels per day seen before the Iran war.
Brent slips as Saudi Gulf exports rise amid Iran diplomacy hopes
Analysts at Commerzbank note that “hopes for new diplomatic efforts to end the conflict with Iran and rising oil shipments from Saudi Arabia put pressure on oil prices at the start of the week,” with Brent “briefly” falling “below the USD 100-per-barrel mark for the first time in eight trading days.” According to the bank, Saudi Arabia “appears to be trying to compensate for the loss of oil shipments via the East-West Pipeline to the Red Sea,” which “was damaged following a missile attack,” by relying on “higher exports via the Persian Gulf.”
Commerzbank highlights that “approximately 14 million barrels of crude oil were loaded onto seven very large crude carriers (VLCCs) at export terminals in the Gulf on Sunday,” a move that “would continue the trend of rising Saudi Arabian oil shipments from the Gulf,” with data provider Vortexa estimating that “3.7 million barrels per day have been loaded since September 12.”
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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