With the opening of today's trading day the USD is slightly declining. Trading volumes in the market is low, as well as traders’ activity. Market participants are adjusting their trading positions in advance of the interest rate by the US Fed decision, which will become known tomorrow at 21:00 (GMT+3). Majority of the market participants believes that at a two-day meeting, which starts today, the US Fed will leave interest rate unchanged. Mixed macro-economic US data has decreased expectations of the interest rate increase at the meeting in September, which puts pressure on the USD. If the rate remains low, the USD will lose its attractiveness to investors. Currently, futures for interest rates show 12% probability of the rate hike in September. Probability of the rate hike in December is estimated at 55%.
Two other largest Central Banks will also make their interest rates decision tomorrow. These are the Bank of Japan (06:00 GMT+3) and RBNZ (24:00).
Despite the decline in the USD oil prices are also declining. November futures for crude oil Brent at ICE Futures fell by 0.33%, to $45.80 per barrel. Spot-price at the beginning of today's European session is maintaining at the level of 45.60. As the Secretary-General of the cartel Muhammad Barkindo noted last weekend, at the upcoming meeting of OPEC in Algiers on Wednesday not decisions will be made.
According to the most analysts of the oil market, as long as oil prices exceeds the level of $40 per barrel, major oil producers will not be interested in freezing oil production.
The increase in active drilling rigs in the United States (current number is 416) shows that oil production is profitability with the current price level. Major oil producers are focused on increasing market share almost weekly gain of Major oil-producing countries are concentrated on increasing their market share and do not plan to reduce or freeze production.
Market participants will monitor the meetings of the US Fed and Bank of Japan. The meetings of the both banks will finish on Wednesday. Interest rates decisions will have strong impact on the US currency, which is used in prices of commodities and oil. Strong USD reduces attractive of oil to the holders of other currencies. Today at 23:30 (GMT+3) American Petroleum Institute (API) will publish report on changes to oil reserves in the USA for last week. If the oil reserves grows, oil priceswill go down.