International benchmark Brent rallied in European trade on Monday to two-week highs, expanding gains for the second session after the US launched air strikes on the Houthi group in Yemen.

Sources said the operation against Houthis could carry on for weeks, which could impact navigation through the Red Sea.

Prices

Brent rose 1.8% today to $71.76 a barrel, the highest since March 3, with a session-low at $70.51.

Brent rose 0.6% on Friday, the third profit in four days away from four-year lows at $68.37.

Global oil prices rose 0.25% last week, the first weekly profit in two months on short-covering.

US Air Strike

US President Donald Trump ordered air strikes against the Houthis on Saturday in response to the Iran-backed group’s attacks on ships in the Red Sea.

Chinese Data

Earlier Beijing data showed retail sales rose 4.0% in February, up from a 3.7% rise in January, and beating estimates of a 3.8% increase.

China’s industrial production rose 5.9% last month, beating estimates of a 5.3% rise.

Such data renewed hopes for an economic recovery in China, which would likely boost demand on fuel in the world’s largest oil consumer. 

The US dollar fell in European trade on Monday against a basket of major rivals, extending losses for the second straight session and about to hit five-month lows following weak US data. 

It comes ahead of the Federal Reserve’s policy meeting this week to discuss monetary policy developments and provide clues on the path ahead for interest rates.

The Index

The dollar index fell 0.3% today to 103.46, with a session-high at 103.80.

On Friday, the index lost 0.1%, resuming losses and rebounding from a five-month low at 103.2.

The index lost 0.2% last week, the second weekly loss in a row on concerns about a potential US recession this year.

Weak Data

Recent US data showed consumer confidence hit 2-⅕ year lows in March in a sign of increasing concerns about recession.

US retail sales rose by less than expected in February, in another sign of slowing growth this quarter.

Fed’s Meeting

The Federal Reserve is convening tomorrow and Wednesday to discuss policies, widely expected to maintain interest rates unchanged while providing clues on the path ahead for monetary policies.

Data released last week showed US consumer prices slowed down more than expected in February, bolstering the case for a Fed rate cut in the first half of the year.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 1%, while the odds of a May rate cut stood at 30%.

The odds of a Fed June 0.25% interest rate cut stood at 75%.

US retail sales rose 0.2% in February, below estimates of a 0.6% rise, and up from a 1.2% drop in January.

Core sales, excluding transportation, rose 0.3% last month as expected, improving from January’s 0.6% decline. 

Silver prices fell in European trade on Monday, extending the losses for the second day and moving away from five-month highs on profit-taking.

The losses are stymied by positive Chinese data that renewed hopes of improving demand on commodities and metals, while the dollar dips against main rivals.

Prices

Silver prices fell 0.5% today to $33.65 an ounce, with a session-high at $33.90.

On Friday, silver lost 0.2%, the first loss in four sessions on profit-taking away from a five-month high $34.08.

Silver rose 4% last week, the second weekly profit in a row as the dollar dipped and the odds of a Fed rate cut in June rallied.

Chinese Data

Earlier Beijing data showed retail sales rose 4.0% in February, up from a 3.7% rise in January, and beating estimates of a 3.8% increase.

China’s industrial production rose 5.9% last month, beating estimates of a 5.3% rise.

Such data renewed hopes for an economic recovery in China, which would likely boost demand on metals in the world’s largest commodity consumer. 

The Dollar

The dollar index fell over 0.1% today against a basket of major rivals, underpinning gold prices.

Recent US data showed consumer confidence hit 2-⅕ year lows in March in a sign of increasing concerns about recession.