Oil bulls may start to reap profit as OPEC steps back

The common currency has trimmed down losses against the dollar after a weak start on Tuesday, as investors continue to get rid of dollar positions while waiting for the cautious tone of Fed Chairman Janet Yellen at tomorrow's meeting. Interest rate futures rule out possibility of the rate increase on Wednesday meeting, as consumer inflation, according to official estimates, has not yet acquired sufficient momentum and continues to depend on monetary support. Much more attention will be pinned to the fate of Fed's balance sheet, which has been maintained at $4.5 trillion through maturing debt reinvestments. A handful part of bank’s portfolio consists of Treasuries and MBS. At two previous meetings, the Fed has made it clear that the reduction in the balance sheet will begin this year, but did not specify a specific month. Investors expect that such a significant shift in monetary policy will be held till September following the example of the ECB.

Taking a stock of Yellen's speech investors probably should pay attention to such points as slowing pace inflation, external risks, as well as the turmoil in the White House, which calls into question the fiscal stimulation promised by POTUS Trump. Futures for the US dollar continued to decline towards the 15-month low at 93.50 and after a minor correction will probably continue to move on the slope touching the bottom before the FOMC decision near level of 93.00

The way up was opened for oil prices, as the OPEC meeting in St. Petersburg ended with a logical sacrifice: Saudi Arabia agreed to limit oil exports by 1 million barrels in August, dropping it to 6.6 M barrels. Nigeria also made concessions: the country agreed to limit production at the level of 1.8M barrels, but has not yet reached this level. Production in Libya remained unlimited, as the country needs funds to recover from the civil war. Oil prices have been rising for the second day in a row, both benchmarks have added about 2 percent at the time of writing the article and are preparing to break through an important psychological level of $50 per barrel.

Asian stocks fell together with the dollar, European stock markets in positive territory due to the growth of the oil market, as well as the prospects for the recovery of the eurozone. Gold and the Japanese yen are in negative territory, as the possible “dovish tone" of the Federal Reserve at the next meeting aroused the risk appetite. Cryptocurrencies are in a slight drawdown, Ethereum lost more than 10%.