The data from the US services sector surprised not only investors in currency pairs, but also those who trade commodities. The price of Brent crude oil fell below $83 per barrel on Monday. Concerns about a larger increase in interest rates than had been widely expected had increased.
Black gold is getting cheaper due to concerns about future monetary policy
The price of Brent crude oil plummeted from levels around 88 to less than 83 dollars a barrel during Monday’s trading. The price of this type of crude oil has thus fallen by less than six per cent in just a few days. Fears of a much tighter monetary policy than previously expected were mainly to blame. The US Federal Reserve is expected to raise rates by only half a percentage point, which is a more moderate rate of increase than during four consecutive “hikes”.
Is GDP growing too slowly in the US?
Monday’s data showed that the US services sector is much more resilient than previously thought. This can be read as a sign of only a slow moderation in the pace of US GDP growth, which may force the Federal Reserve to take much more drastic action. Especially if inflation does not fall significantly. “Macroeconomic concerns about the Fed’s decision are spreading through the market,” Phil Flynn, an analyst at Price Futures, told Reuters.
