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OPEC Worries Over Oil Prices Drop

Tuesday, September 1, 2015 9:44 AM GMT

- USD/CAD Hits Fresh Low as US Crude Oil Broke above the 48 Dollar Mark. WTI crude closes up 29% from Aug. 24 low, enters bull market. To elaborate on, oil is racing back to nearly $50 a barrel. That amounts to a 30% spike in the span of merely a week. Over the past three days alone crude enjoyed its largest percentage gain since August 1990, according to The Wall Street Journal. ( Source: DailyFX)

- China accounted for 17 percent of the world’s gross domestic product in 2014.1 It is also the world’s largest saver,2 but it is almost a closed economy in terms of capital flows. China has undertaken various economic reforms in recent years. These reforms include deepening its capital markets and increasing the importance of the yuan in the global economy.3 Some commentators have argued that the yuan may become a global reserve currency in the near future, given these reforms and China’s rising importance in world trade. (Source: FXStreet)

- China's official manufacturing purchasing managers' index (PMI) edged down to 49.7 in August from 50 in July, just below the 50-mark that separates expansion from contraction. Economists in a Reuters poll had expected a figure of 49.7. China's Caixin Composite PMI dipped to its lowest level since September 2012. (Source: FXStreet)

- RBA: Economy growing at rate below longer-term average, economy likely to have spare capacity for some time. Equity markets considerably more volatile of late.  Dwelling prices continue to rise strongly in Sydney. Further softening of conditions in China of late. Equities moved lower, more volatile in line with global markets. Also, economy growing at rate below longer-term average, economy likely to have spare capacity for some time. All in all, '' Economic, financial conditions to inform policy stance. Monetary policy needs to be accommodative.'' ( Source: Yahoo!Finance)

- So far this session, JPY has been the best performing major vs USD with +0.46% spot returns while NZD has been the worst with -2.06%. (Source: StockTwits)

- Japan's Economy Minister Akira Amari: Recovery in CAPEX is still weak. Investment, production on the whole on recovery track.  ( Source: DailyFX)

- Morgan Stanley cuts 2015 global growth forecast from 3.4% to 3.1%. (Source: Bloomberg)

- OPEC is concerned by the drop in oil prices—trading near multi-year lows—and is ready to talk to other producers, an article in an OPEC publication issued on Monday said. "Today's continuing pressure on prices, brought about by higher crude production, coupled with market speculation, remains a cause for concern for OPEC and its members—indeed for all stakeholders in the industry," the commentary in the latest OPEC Bulletin said. The Organization of the Petroleum Exporting Countries renewed its openness for dialogue with other producers. (Source: MarketPulse)

- European stocks were poised to close out the worst month in years for the region on Monday with more losses, as major oil companies fell on the heels of lower oil prices. The Stoxx Europe 600 SXXP, -0.11% was flat at 363.56, leaving it poised for a monthly loss of 8.5%. According to FactSet Research, that would be the biggest monthly loss since August 2011, when the index fell nearly 10.5%. The index fell 6.8% in May 2012 and 5.3% in June 2013. Fears of more volatility for Chinese stocks rattled investors. (Source: BusinessInsider)

- Russia’s president Vladimir Putin has taken plans to create an integrated currency market in the Commonwealth of Independent States (CIS) one step closer to reality. On Friday – August 28, 2015, the Russian president submitted the relevant draft law, named “On Ratification of the Agreement on Cooperation in Organising an Integrated Currency Market in the Commonwealth of Independent States” to the State Duma, the lower chamber of the Russian parliament. The bill aims to put into action parts of the Plan for Implementing CIS Joint Measures to Overcome the Consequences of the Global Financial and Economic Crisis for 2009–2010. (Source: LeapRate)

- Forecasts: EUR Getting Dizzy; Where To From Here? - BofA Merrill: still looking for parity, but risks have increased. We are keeping our EUR/USD end-2015 projection at parity for now. We like selling the EUR/USD rallies when we get them, as the path will continue being volatile. We also note that the Eurozone’s unemployment rate is the highest in G10 compared with pre-crisis levels, and that the Eurozone also has the largest output gap (see The USD has not peaked yet). This suggests that EUR/USD could weaken more and remain weak in the medium term. Which are the risks?  If the Fed does not hike this year and/or the ECB sends mixed messages following its new macro projections in the September meeting, EUR/USD could move again to 1.15 or even higher. Negative developments in China will continue supporting the EUR in the short term... (Source: FXStreet)

- Today’s Upcoming Events: EZ unemployment , US auto sales, US ISM manufacturing.


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