The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meets on Monday. The group is slowly unwinding record output cuts made last year, although sources say it is considering doing more to boost production. OPEC+ is facing pressure from consumers such as the United States and India to produce more to help reduce prices as demand has recovered faster than anticipated in some parts of the world. If OPEC+ sticks to the script and only delivers the planned 400,000 bpd increase in November, energy markets will shortly be seeing $85 oil prices.
Trading recommendation: Buy 74.00 and take profit 76.90.
U.S. manufacturing activity picked up further in September. The Institute for Supply Management said its index of national factory activity increased to a reading of 61.1 last month from 59.9 in August. The ISM survey's forward-looking new orders sub-index held at a reading of 66.7 last month. Manufacturing is being underpinned by businesses desperate to rebuild stocks after inventories were depleted in the first half of the year. A gauge of factory employment rebounded last month after falling in August to its lowest level since November. That suggests manufacturing payrolls growth likely picked up in September after slowing in the prior month. This is a positive signal for the U.S. stock market.
Trading recommendation: Buy 4325 and take profit 4455.
The Federal Reserve’s conditions for raising interest rates could be met by the end of 2022, Cleveland Fed Bank President Loretta Mester said, adding that she expects inflation to come back down to the central bank’s target next year. “I think we’ll see progress in the labor market and progress on inflation coming back down,” Mester said during a virtual panel organized by the Shadow Open Market Committee. Mester said she expects inflation will start to come back down once supply side and pent-up demand factors ease, forecasting inflation will be above 2% in 2022 and 2023. This is a positive signal for the US dollar and a negative signal for gold.
Trading recommendation: sell 1774.50 and take profit 1745.10.