OPEC extends production cuts The Organization of Petroleum Exporting Countries (OPEC) issued a statement on the 3rd saying that eight OPEC and non-OPEC oil-producing countries decided to extend the voluntary production cuts of 2.2 million barrels per day, which were originally scheduled to expire at the end of November, to the end of December. The statement said that eight "OPEC+" member countries, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, decided to extend the voluntary production cuts. The statement did not mention whether the eight countries will begin to withdraw this part of the production cuts in January next year. The statement said that the eight countries reiterated their determination to fully comply with the voluntary production cut targets, and the relevant countries whose production has exceeded the quota since the beginning of this year will complete the compensatory production cut obligations by September 2025.
In the early morning of November 8 (Friday) Beijing time, the Federal Reserve will announce its November interest rate decision, and the market generally expects it to announce a 25 basis point interest rate cut. The Reserve Bank of Australia and the Bank of England will also announce interest rate decisions on November 5 (Tuesday) and November 7 (Thursday) Beijing time, respectively. Whether the Bank of England will restart easing has attracted attention. Since last week, the Federal Reserve has entered a silent period. The US PCE data and "non-farm" employment data released last week are expected to become an important reference for Fed officials to make decisions. According to data from the US Department of Labor, the number of "non-farm" employment in the United States increased by only 12,000 in October, an estimated increase of 105,000, and the previous value was an increase of 254,000. This is the lowest monthly employment increase since December 2020. From a macroeconomic perspective, the core PCE indicator that the Federal Reserve pays the most attention to shows that US inflation remains stubborn. The US core PCE price index rose 2.7% year-on-year in September, the same as the previous value, exceeding the expected 2.6%.
The Bank of England will announce its interest rate decision at 20:00 on November 7 (Thursday) Beijing time. At the September meeting, the Bank of England kept the interest rate unchanged at 5.0% and said it would be cautious about future interest rate cuts. Despite this, Bank of England Governor Bailey recently said that if data continues to show progress in inflation, they may need to cut interest rates more aggressively. In fact, the UK's overall CPI fell from 2.2% to 1.7% in September, while the core CPI fell from 3.6% to 3.2%. Interest rate market pricing shows that the Bank of England has an 80% chance of cutting interest rates by 25 basis points this time, but the bank has only a 30% chance of cutting interest rates by another 25 percentage points in December.
Exchange rate The exchange rate directly affects the export profits of textile companies. In the recent short period of time, the RMB exchange rate against the US dollar has fluctuated sharply, from breaking through 7 to quickly falling below 7.16. Recently, the RMB exchange rate has begun to appreciate again. The offshore RMB exchange rate against the US dollar has continuously broken through the two major barriers of 7.10 and 7.09, rising by more than 500 basis points in the day, and the highest rose to 7.0861. It can be foreseen that the exchange rate fluctuations will continue for some time. Raw material prices Crude oil prices have fluctuated greatly recently, and the fluctuations in crude oil are mainly affected by geopolitical conflicts, which are the spillover of the US global strategy. The future trend of crude oil prices will largely depend on the results of the election. In terms of tariffs, Trump's policy is to reduce taxes domestically to attract manufacturing back to China and to increase taxes abroad, while Harris' policy is to reduce taxes abroad and to increase taxes on the rich and large companies at home. Therefore, the election results will largely affect the direction of future tariffs. If Trump is elected, it is highly likely that tariffs will continue to be increased.
