On July 13th, the latest monthly report from the International Energy Agency revealed that the United Arab Emirates' daily crude oil production in June climbed to 4.1 million barrels, setting a new historical record.
This figure surpasses the previous peak of 4.0 million barrels per day in 2020, a period when the UAE significantly ramped up production during a brief price war with Saudi Arabia over OPEC+ policy.
The new record follows closely on the UAE's exit from the Organization of the Petroleum Exporting Countries, further indicating that the country's response to supply disruptions triggered by the Iran war has been more aggressive than any of its Persian Gulf neighbors.
The strong rebound in production largely occurred before this week's attack on commercial vessels in the Strait of Hormuz, and prior to that, the UAE announced its withdrawal from OPEC in late April to free itself from the organization's production limits and fully advance its expansion plans.
The recovery in Persian Gulf crude exports, combined with the fragile peace agreement between the US and Iran, has at times shifted the global market from tight supply to signs of oversupply in some key regions, erasing the cumulative gains in oil prices accrued during the war.
In other news, according to informed sources, the Bank of Japan may slightly raise its economic growth forecast for fiscal year 2026 at the policy meeting concluding on July 31st, while moderately lowering its short-term inflation outlook due to falling oil prices.
However, this adjustment is not expected to alter the central bank's vigilant stance on inflation risks—any downward revision in inflation will likely be framed as a reflection of the oil price decline, not a softening of the policy stance.
Market expectations are widely for the Bank of Japan to keep its short-term policy rate unchanged at 1% at the July meeting, though most analysts still anticipate another rate hike to 1.25% by year-end.
The Bank of Japan will release its quarterly Economic and Price Outlook report on July 31st, and the market will closely watch for clues regarding the timing and pace of further rate hikes.
Sources indicate the central bank may slightly raise its fiscal 2026 growth forecast from the 0.5% projected in April, reflecting strong AI demand and the positive impact of lower fuel costs, while possibly moderately lowering its core inflation forecast from April's projection of 2.8%, mainly due to the significant drop in oil prices triggered by the preliminary US-Iran peace agreement in early June.
Data to watch today includes Canada's National Economic Confidence Index for the week ending July 10th, Germany's unadjusted current account for May, and the US New York Fed's 1-year inflation expectations for June.
Gold/USD
Gold fluctuated within a narrow range last Friday, closing slightly lower on the daily chart.
In addition to profit-taking exerting some downward pressure, lingering expectations for a Federal Reserve rate hike also weighed on the precious metal.
In early Asian trading, gold fell as renewed Middle East tensions over the weekend stoked inflation concerns, with the current price trading around 4062.
Today, focus will be on resistance near the 4100 level, with support found around 4000.
USD/JPY
The USD/JPY pair moved lower last Friday, hitting a new one-week low, with the current price trading around 162.00.
Aside from profit-taking applying pressure, renewed concerns about potential Japanese intervention in the currency market also contributed to the pair's weakness.
Furthermore, rekindled expectations for a Bank of Japan interest rate hike added to the downward pressure.
Today, attention turns to resistance near 163.00, with support located around 161.00.
USD/CAD
The USD/CAD pair trended lower last Friday, reaching a fresh three-week low, with the current price trading around 1.4160.
Better-than-expected Canadian economic data released during the session was the primary driver behind the decline.
Data showed that Canadian employment increased by 18,200 in June, surpassing expectations of a 10,000 gain.
However, a stabilizing US Dollar Index and a retreat in crude oil prices limited the pair's downside.
Today, focus will be on resistance near 1.4250, with support around the 1.4050 level.
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