Oil Settles Lower

Trading 03 août 2018 Commentaire »

Oil prices edged lower on Friday, amid renewed concerns about excess supply in the market, after data showed oil output in Russia to have increased sharply in July.

Russian oil output rose by 150,000 barrels per day in July from a month earlier, surpassing the amount Moscow had said it would add following a key Vienna meeting in June.

Concerns about a likely drop in demand for crude amid escalating U.S.-China trade war weighed as well.

Meanwhile, Saudi Arabia has cut the September official selling prices for all its grades to meet customer demand.

Baker Hughes reported that active U.S. rigs count dropped by 2 to 859 rigs in the week. Last week, Baker Hughes said, three rigs were added in the U.S, taking the total rig count in the country to 861.

Oil's downside was somewhat limited due to U.S. sanctions on Iran.

Crude oil futures for September settled at $68.49 a barrel, losing $0.47, or 0.7% in the session. For the week, oil shed about 0.3%.

On Thursday, crude oil futures ended up $1.30, or 1.9%, at $68.96 a barrel.

Crude oil prices climbed higher on Thursday on reports that crude stockpiles at Cushing, Okla declined by about 3.6%.

Before Thursday's rise, oil prices had weakened after data from Energy Information Administration on Wednesday showed U.S. crude inventories to have risen unexpectedly by 3.8 barrels last week.

A day earlier, the American Petroleum Institute released a report that showed U.S. crude stockpiles rose by 5.59 million barrels last week, compared to expectations for a 2.8 million-barrel drawdown.


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Treasuries Move Notably Higher Following Monthly Jobs Report

Trading 03 août 2018 Commentaire »

After ending the previous session modestly higher, treasuries saw some further upside during the trading day on Friday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 2.953 percent.

With the drop on the day, the ten-year yield continued to pull back after closing above 3 percent for the first time in well over two months on Wednesday.

The strength among treasuries came following the release of a report from the Labor Department showing weaker than expected job growth in the month of July due in part to a drop in government employment and the closing of Toys "R" Us stores.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

With the upward revisions, employment gains in May and June combined were 59,000 more than previously reported.

The report also showed a modest decrease in the unemployment rate, which edged down to 3.9 percent in July from 4.0 percent in June. The drop matched economist estimates.

Meanwhile, the Labor Department said the annual rate of average hourly employee earnings growth was unchanged from the previous month at 2.7 percent.

Gregory Daco, Chief U.S. Economist at Oxford Economics, said gradually firming wages, steady labor force participation, and falling unemployment is expected to persist into the second half of the year.

"We expect around 180,000 jobs per month to be added through the rest of 2018," Daco said. "In this context, we continue to foresee four Fed rate hikes in 2018, unless trade policy foils these plans."

A separate report from the Commerce Department showed the U.S. trade deficit widened in the month of June amid an increase in imports and a decrease in exports.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

The Institute for Supply Management also released a report showing growth in U.S. service sector activity slowed by much more than anticipated in the month of July.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

The economic calendar for next week is relatively quiet following the slew of key economic data and events over the past week, although reports on producer and consumer price inflation are likely to attract attention.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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Dollar Little Changed After Jobs Report

Trading 03 août 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Friday afternoon. The buck is up slightly against its major European rivals, but is down against the Japanese Yen. The widely followed U.S. jobs report showed weaker than expected employment growth this morning, but an upward revision to employment growth for the previous two months.

Partly reflecting a drop in government employment and the closing of Toys "R" Us stores, the Labor Department released a report on Friday showing much weaker than expected U.S. job growth in the month of July.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

Despite the smaller than expected increase in employment, the unemployment rate dipped to 3.9 percent in July after rising to 4.0 percent in June. The modest drop matched expectations.

Reflecting a decrease in exports and an increase in imports, the Commerce Department released a report on Friday showing the U.S. trade deficit widened in the month of June.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

Growth in U.S. service sector activity slowed by much more than anticipated in the month of July, according to a report released by the Institute for Supply Management on Friday.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

The dollar dropped to a low of $1.1610 against the Euro Friday, but has since bounced back to around $1.1575.

Euro area private sector growth eased in July, ceding most of the momentum gained in the prior survey month, data from IHS Markit showed Friday. The composite output index fell to 54.3 in July, in line with flash estimate, from 54.9 in June.

Eurozone retail sales increased for the second straight month in June, data from Eurostat showed Friday. Retail sales grew at a steady pace of 0.3 percent on month in June driven by food sales. Sales were expected to climb 0.4 percent.

The buck fell to a low of $1.3043 against the pound sterling Friday, but has since rebounded to around $1.30.

British service sector grew at the weakest pace in three months as greater risk aversion in response to Brexit uncertainty held back new business growth in July, survey data from IHS Markit showed Friday.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index dropped more-than-expected to 53.5 in July from 55.1 in June. The reading was forecast to fall to 54.7.

Members of the Bank of Japan's monetary policy board said that the country's economy continues to expand at a moderate pace, minutes from the bank's June 14 and 15 meeting revealed on Friday.

The members added that the expansion is expected to continue, the minutes showed, although they pointed out that downside risks include erratic U.S. policy and the UK's withdrawal from the European Union.

"There had been a situation where investors' risk-taking stance had become cautious, as seen, for instance, in temporary declines in stock prices through end-May in many countries, mainly against the background of heightened uncertainties over political developments in southern Europe and of concern regarding the U.S. trade policy," the minutes said.

The greenback reached an early high of Y111.853 against the Japanese Yen Friday, but has since retreated to around Y111.235.

The services sector in Japan continued to expand in July, albeit at a slower pace, the latest survey from Nikkei showed on Friday with a PMI score of 51.3. That's down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.


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Gold Settles Higher After Tepid Jobs Data

Trading 03 août 2018 Commentaire »

Gold futures settled higher on Friday, bouncing back after early weakness, as data released by the U.S. Labor Department showed job growth in the month of July to have fallen short of estimates.

Spot Gold plunged to a near 17-month low of $1,204 early on Friday, as the dollar rose to a two-week high ahead of the release of July jobs data by the U.S. Labor department.

However, after data showed much weaker than expected U.S. job growth in the month of July, the dollar retreated and the bullion gained in strength.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

The weaker than expected job growth in July was partly due to a drop in government employment, which fell by 13,000 jobs as some teachers were laid off for the summer.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively. With the upward revisions, employment gains in May and June combined were 59,000 more than previously reported.

Despite the smaller than expected increase in employment, the unemployment rate dipped to 3.9% in July after rising to 4.0% in June.

Gold futures for December ended up up $3.10, or nearly 0.2%, at $1,223.20 an ounce. However, gold futures lost about 0.8% in the week, recording losses for the fourth successive week.

Silver futures for September were up $0.080, or 0.52%, at $15.465 an ounce. Copper futures edged up by $0.020, or 071%, to $2.757 per pound.

Other economic data from U.S. too fell short of expectations. A report from the Institute of Supply Management showed that growth in U.S. service sector activity slowed by much more than anticipated in the month of July, with the ISM non-manufacturing index dropping to 55.7 in the month, after rising to 59.1 in June.

The report showed a significant decrease by the business activity index, which tumbled to 56.5 in July from 63.9 in the previous month.

Meanwhile, a report from the Commerce Department showed the U.S. trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

The mood was cautious due to trade war concerns on reports China is countering U.S. move to impose 25% tariffs on $200 billion worth of Chinese goods into U.S., by proposing tariffs on about $60 billion worth U.S. goods.


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U.S. Service Sector Growth Slows More Than Expected In July

Trading 03 août 2018 Commentaire »

Growth in U.S. service sector activity slowed by much more than anticipated in the month of July, according to a report released by the Institute for Supply Management on Friday.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

The report showed a significant decrease by the business activity index, which tumbled to 56.5 in July from 63.9 in the previous month.

The new orders index also slumped to 57.0 in July from 63.2 in June, indicating a notable slowdown in the pace of new orders growth.

The ISM said the supplier deliveries index also dipped to 53.0 in July from 55.5 in June, although a reading above 50 still indicates slower deliveries.

"There has been a 'cooling off' in growth for the non-manufacturing sector," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

"Tariffs and deliveries are an ongoing concern," he added, but noted, "The majority of respondents remain positive about business conditions and the economy."

Meanwhile, the report said the employment index rose to 56.1 in July from 53.6 in June, suggesting a faster rate of job growth in the service sector.

The Labor Department's monthly jobs report released earlier in the day showed employment in the service-providing sector increased by 118,000 jobs in July after jumping by 182,000 jobs in June.

On the inflation front, the prices index climbed to 63.4 in July from 60.7 in June, indicating prices increased for the 29th consecutive month.

The ISM released a separate report on Wednesday showing growth in U.S. manufacturing activity slowed by more than anticipated in July.

The index of activity in the manufacturing sector fell to 58.1 in July after unexpectedly climbing to 60.2 in June, while economists had expected the index to show a more modest drop to 59.5.


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Dollar Little Changed After ISM Non-manufacturing Composite Index

Trading 03 août 2018 Commentaire »

Following the release of Institute for Supply Management's Non-Manufacturing Index for July at 10.00 am ET Friday, the greenback changed little against its major rivals.

The greenback was worth 1.1582 against the euro, 1.3009 against the pound, 111.19 against the yen and 0.9934 against the franc around 10:03 am ET.


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*ISM U.S. Non-Manufacturing Index Drops To 55.7 In July

Trading 03 août 2018 Commentaire »

ISM U.S. Non-Manufacturing Index Drops To 55.7 In July


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Dollar Falls As U.S. Job Growth Slows More Than Forecast

Trading 03 août 2018 Commentaire »

The U.S. dollar dropped against its major counterparts in the European session on Friday, after a data showed that the economy created fewer jobs than forecast in July, partly driven by a drop in government employment and the closing of Toys "R" Us stores.

Data from the Labor Department showed that non-farm payroll employment climbed by 157,000 jobs in July after spiking by an upwardly revised 248,000 jobs in June.

Economists had expected employment to increase by about 190,000 jobs compared to the jump of 213,000 jobs originally reported for the previous month.

Despite the weaker than expected job growth, the unemployment rate edged down to 3.9 percent in July from 4.0 percent in June, matching estimates.

Data from the Commerce Department showed that the U.S. trade deficit widened in June, reflecting an increase in imports and a decrease in exports.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

The Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of July at 10:00 am ET.

The ISM's non-manufacturing index is expected to edge down to 58.6 in June from 59.1 in July.

The currency held steady against its major counterparts in the Asian session.

The greenback pulled back from an early weekly high of 0.9966 against the franc with the pair trading at 0.9937. On the downside, 0.97 is possibly seen as the next support level for the greenback.

Data from the Federal Statistical Office showed that Switzerland's consumer price inflation continued to rise in July.

Consumer price inflation rose to 1.2 percent in July from 1.1 percent in June. The rate came in line with expectations.

The greenback depreciated 0.4 percent to 111.37 against the yen, after rising to a 2-day high of 111.87 hit at 4:00 am ET. The greenback is poised to find support around the 110.00 level.

The latest survey from Nikkei showed that Japan's services sector continued to expand in July, albeit at a slower pace, with a PMI score of 51.3.

That's down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

Following a 5-week high of 1.1562 hit at 4:00 am ET, the greenback reversed direction against the euro and was trading lower at 1.1602. Continuation of the greenback's downtrend is likely to see it challenging support around the 1.18 region.

Data from IHS Markit showed that euro area private sector growth eased in July, ceding most of the momentum gained in the prior survey month.

The composite output index fell to 54.3 in July, in line with flash estimate, from 54.9 in June.

The greenback was trading weaker at 1.3016 against the pound, down from more than a 2-week high of 1.2976 seen at 3:45 am ET. The greenback may target support around the 1.32 level, if it falls further.

Survey data from IHS Markit showed that British service sector growth eased more-than-expected in July to the weakest level in three months.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index dropped to 53.5 in July from 55.1 in June. The index was forecast to drop to 54.7.

The greenback slipped to a 2-day low of 1.2980 against the loonie, moving away from a high of 1.3039 set at 4:00 am ET. The next likely support for the greenback is seen around the 1.28 level.

Reversing from its early 2-week highs of 0.7348 against the aussie and 0.6720 against the kiwi, the greenback fell and was quoted at 0.7390 and 0.6746, respectively. The greenback is seen finding support around 0.75 against the aussie and 0.69 against the kiwi.

The U.S. ISM non-manufacturing composite PMI for July is due at 10:00 am ET.


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U.S. Trade Deficit Widens Amid Drop In Exports, Increase In Imports

Trading 03 août 2018 Commentaire »

Reflecting a decrease in exports and an increase in imports, the Commerce Department released a report on Friday showing the U.S. trade deficit widened in the month of June.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

"The outcome was close to what we were expecting based on the advance economic indicators reports and the assumptions made by the BEA in calculating Q2 GDP," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

The wider trade deficit was partly due to a pullback in the value of exports, which fell by 0.7 percent to $213.8 billion in June after surging up by 1.9 percent to $215.3 billion in May.

Notable decreases in imports of consumer goods, capital goods, and passenger cars were partly offset by a jump in exports of industrial supplies and materials.

The report also said the value of imports climbed by 0.6 percent to $260.2 billion in July after rising by 0.5 percent to $258.5 billion in June.

Imports of drugs and crude oil showed significant increases during the month, more than offsetting a drop in imports of capital goods.

Amid President Donald Trump's escalating trade dispute with China, the Commerce Department said the U.S. had a $32.5 billion trade deficit with the communist country in June.


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U.S. Job Growth Falls Short Of Estimates In July

Trading 03 août 2018 Commentaire »

Partly reflecting a drop in government employment and the closing of Toys "R" Us stores, the Labor Department released a report on Friday showing much weaker than expected U.S. job growth in the month of July.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

With the upward revisions, employment gains in May and June combined were 59,000 more than previously reported.

The weaker than expected job growth in July was partly due to a drop in government employment, which fell by 13,000 jobs as some teachers were laid off for the summer.

The report also showed a loss of 32,000 jobs at sporting goods, hobby, book, and music stores due in part to Toys "R" Us closing its stores following the company's bankruptcy filing.

Meanwhile, notable job growth was seen in leisure and hospitality, manufacturing, healthcare and social assistance, and temporary help services.

Despite the smaller than expected increase in employment, the unemployment rate dipped to 3.9 percent in July after rising to 4.0 percent in June. The modest drop matched expectations.

The pullback in the unemployment rate came as the household survey measure of employment showed a jump of 389,000, easily outpacing the 105,000 person increase in the labor force.

Meanwhile, the Labor Department said the annual rate of average hourly employee earnings growth was unchanged from the previous month at 2.7 percent.

Gregory Daco, Chief U.S. Economist at Oxford Economics, said gradually firming wages, steady labor force participation, and falling unemployment is expected to persist into the second half of the year.

"We expect around 180,000 jobs per month to be added through the rest of 2018," Daco said. "In this context, we continue to foresee four Fed rate hikes in 2018, unless trade policy foils these plans."


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