Oil Slips As Trade War Tensions Fuel Demand Growth Concerns

Trading 06 sept 2018 Commentaire »

Despite data showing a decline in crude stockpiles in the U.S., oil prices eased on Thursday as traders weighed the possibility of a drop in demand for crude due to U.S.-China trade tensions and the current economic turmoil in some emerging markets.

Data from the Energy Information Administration showed that crude supplies in the U.S. declined by 4.3 million barrels for the week ended August 31. That was a much larger than expected drop. The report also revealed that gasoline stockpiles increased by 1.8 million barrels in the week, while distillate stockpiles were up by 3.1 million barrels.

According to the report released by the American Petroleum Institute on Wednesday, oil stockpiles decreased by 1.2 million barrels last week.

Markets also expect crude supplies to drop significantly after the beginning of U.S. sanctions on Iranian oil from early November.

Meanwhile, a survey report from S&P Global Platts said OPEC saw output rise to 32.89 million barrels a day in August, a 10-month high.

Crude oil futures for October delivery ended down $0.95, or 1.4%, at $67.77 a barrel, the lowest settlement in more than two weeks.

On Wednesday, crude oil futures ended down $1.15, or 1.7%, at $68.72 a barrel.

Reports suggest the U.S. will implement new tariffs on imports worth $200 billion from China, effective this week.

Meanwhile, China has reportedly warned that it will be forced to retaliate if the United States implements any new tariff measures after the end of a public comment period.

According to some media reports, the United States and Canada have made progress in talks to revise the North American Free Trade Agreement. Officials of the two countries resumed trade talks on Wednesday, after the discussions last week ended without any progress.


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Dollar Trading Mixed After Data Deluge

Trading 06 sept 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Thursday afternoon, following the release of a large number of U.S. economic reports. Despite the deluge of data released this morning, traders are looking ahead to the release of the all important jobs report for August tomorrow morning.

Private sector employment in the U.S. rose by less than expected in the month of August, according to a report released by payroll processor ADP on Thursday. ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July.

Economists had expected an increase of about 190,000 jobs compared to the spike of 219,000 jobs originally reported for the previous month.

A day ahead of the release the more closely watched monthly employment report, the Labor Department released a report on Thursday showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended September 1st.

The report said initial jobless claims dipped to 203,000, a decrease of 10,000 from the previous week's unrevised level of 213,000. Economists had expected jobless claims to inch up to 214,000.

Reflecting upward revisions to both output and hours worked, the Labor Department released a report on Thursday showing the pace of growth in labor productivity was unrevised in the second quarter.

The report said labor productivity increased by 2.9 percent in the second quarter, unrevised from the preliminary estimate but still reflecting a significant acceleration from the 0.3 percent uptick in the first quarter. Economists had expected productivity growth to be upwardly revised to 3.0 percent.

Meanwhile, the Labor Department said the decrease in unit labor costs in the second quarter was revised to 1.0 percent from 0.9 percent. The drop in unit labor costs was expected to be unrevised.

A report released by the Institute for Supply Management on Thursday showed a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in the month of August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

New orders for U.S. manufactured goods pulled back by more than expected in the month of July, according to a report released by the Commerce Department on Thursday. The Commerce Department said factory orders fell by 0.8 percent in July after climbed by a downwardly revised 0.6 percent in June.

Economists had expected factory orders to drop by 0.6 percent compared to the 0.7 percent increase originally reported for the previous month.

The dollar as climbed to around $1.1615 against the Euro Thursday afternoon, from an early low of $1.1658.

Germany's factory orders dropped unexpectedly on foreign demand in July amid trade disputes with the United States. Data from Destatis, released Thursday, showed that new orders in manufacturing fell 0.9 percent in July from June, confounding expectations for an increase of 1.8 percent.

Germany's construction activity returned to growth midway through the third quarter after having stalled in July, survey results from IHS Markit showed Thursday. The headline construction Purchasing Managers' Index ticked up to 51.5 in August from 50.0 'no-change' mark in July.

The buck dropped to a low of $1.2961 against the pound sterling Thursday, but has since bounced back to around $1.2930.

The greenback rose to an early high of Y111.456 against the Japanese Yen Thursday, but has since retreated to around Y110.800.


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Treasuries Move To The Upside Following Slew Of Economic Data

Trading 06 sept 2018 Commentaire »

After ending the previous session roughly flat, treasuries moved moderately higher over the course of the trading day on Thursday.

Bond prices moved to the upside early in the session and remained in positive territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 2.879 percent.

The strength among treasuries came following the release of a slew of U.S. economic data, including a report from payroll processor ADP showing private sector employment rose by less than expected in the month of August.

ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July. Economists had expected an increase of about 190,000 jobs.

"Although we saw a small slowdown in job growth the market remains incredibly dynamic," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

The report is expected to show employment increased by about 191,000 jobs in August after rising by 157,000 jobs in July. The unemployment rate is expected to dip to 3.8 percent from 3.9 percent.

In other economic news, the Institute for Supply Management released a report showing a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

"There was a strong rebound for the non-manufacturing sector in August after growth 'cooled off' in July," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

"Logistics, tariffs and employment resources continue to have an impact on many of the respective industries," he added. "Overall, the respondents remain positive about business conditions and the economy."

Traders also kept an eye out for developments regarding trade, as U.S. and Canadian officials continue to hold talks on reforming NAFTA.

Meanwhile, President Donald Trump purportedly intends to impose tariffs on another $200 billion worth of Chinese goods as soon as the end of a public comment period at midnight.

China's Commerce Ministry has warned it will be forced to roll out necessary retaliatory measures if the U.S. adopts any new tariffs.

The monthly jobs report is likely to be in the spotlight on Friday, although news regarding the tariffs on Chinese imports could also impact trading.


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Gold Settles Marginally Higher As Dollar Retreats

Trading 06 sept 2018 Commentaire »

Gold prices edged higher on Thursday as traders indulged in some short covering in the yellow metal futures after the U.S. dollar weakened a bit against major currencies.

The dollar weakened after a report from private payroll processor ADP showed that the U.S. created 163,000 jobs in August, much lower than the expected 190,000 positions. With the number falling short of expectations, it is now being felt that the Fed may not resort to any aggressive monetary tightening for now.

Gold futures for December ended up $3.00, or 0.25%, at $1,204.30 an ounce. On Wednesday, gold futures ended up $2.20, at $1,201.30 an ounce.

Silver futures for December settled at $14.181 an ounce, down $0.039 from previous close.

Copper futures for December ended up $0.0265, at $2.6365 per pound.

According to a report released by payroll processor ADP, private sector employment in the U.S. rose by less than expected in the month of August. ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July.

Economists had expected an increase of about 190,000 jobs compared to the spike of 219,000 jobs originally reported for the previous month.

Markets now await the official U.S. jobs data for the month of August, due on Friday, for additional clues about the pace of interest rate hikes by the Federal Reserve.

Also, with the public comment period on possible U.S. tariffs on another $200 billion of Chinese goods ending at midnight, the greenback was rather subdued today.

China has reportedly warned that it will be forced to retaliate if the United States implements any new tariff measures.

Meanwhile, U.S.-Canada trade tensions have eased a bit on reports that there is some progress in the talks between the two countries with regard to the North American Free Trade Agreement.


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Dollar Trading Mixed After Data Deluge

Trading 06 sept 2018 Commentaire »

The dollar is turning in a mixed performance against its major rivals Thursday afternoon, following the release of a large number of U.S. economic reports. Despite the deluge of data released this morning, traders are looking ahead to the release of the all important jobs report for August tomorrow morning.

Private sector employment in the U.S. rose by less than expected in the month of August, according to a report released by payroll processor ADP on Thursday. ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July.

Economists had expected an increase of about 190,000 jobs compared to the spike of 219,000 jobs originally reported for the previous month.

A day ahead of the release the more closely watched monthly employment report, the Labor Department released a report on Thursday showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended September 1st.

The report said initial jobless claims dipped to 203,000, a decrease of 10,000 from the previous week's unrevised level of 213,000. Economists had expected jobless claims to inch up to 214,000.

Reflecting upward revisions to both output and hours worked, the Labor Department released a report on Thursday showing the pace of growth in labor productivity was unrevised in the second quarter.

The report said labor productivity increased by 2.9 percent in the second quarter, unrevised from the preliminary estimate but still reflecting a significant acceleration from the 0.3 percent uptick in the first quarter. Economists had expected productivity growth to be upwardly revised to 3.0 percent.

Meanwhile, the Labor Department said the decrease in unit labor costs in the second quarter was revised to 1.0 percent from 0.9 percent. The drop in unit labor costs was expected to be unrevised.

A report released by the Institute for Supply Management on Thursday showed a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in the month of August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

New orders for U.S. manufactured goods pulled back by more than expected in the month of July, according to a report released by the Commerce Department on Thursday. The Commerce Department said factory orders fell by 0.8 percent in July after climbed by a downwardly revised 0.6 percent in June.

Economists had expected factory orders to drop by 0.6 percent compared to the 0.7 percent increase originally reported for the previous month.

The dollar as climbed to around $1.1615 against the Euro Thursday afternoon, from an early low of $1.1658.

Germany's factory orders dropped unexpectedly on foreign demand in July amid trade disputes with the United States. Data from Destatis, released Thursday, showed that new orders in manufacturing fell 0.9 percent in July from June, confounding expectations for an increase of 1.8 percent.

Germany's construction activity returned to growth midway through the third quarter after having stalled in July, survey results from IHS Markit showed Thursday. The headline construction Purchasing Managers' Index ticked up to 51.5 in August from 50.0 'no-change' mark in July.

The buck dropped to a low of $1.2961 against the pound sterling Thursday, but has since bounced back to around $1.2930.

The greenback rose to an early high of Y111.456 against the Japanese Yen Thursday, but has since retreated to around Y110.800.


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Treasury Announces Details Of Next Week's Long-Term Securities Auctions

Trading 06 sept 2018 Commentaire »

On Thursday, the Treasury Department announced the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to sell $35 billion worth of three-year notes next Tuesday, $23 billion worth of ten-year notes next Wednesday and $15 billion worth of thirty-year bonds next Thursday.


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*U.S. Crude Oil Inventories Tumble 4.3 Million Barrels In Week Ended 8/31

Trading 06 sept 2018 Commentaire »

U.S. Crude Oil Inventories Tumble 4.3 Million Barrels In Week Ended 8/31


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U.S. Factory Orders Pull Back More Than Expected In July

Trading 06 sept 2018 Commentaire »

New orders for U.S. manufactured goods pulled back by more than expected in the month of July, according to a report released by the Commerce Department on Thursday.

The Commerce Department said factory orders fell by 0.8 percent in July after climbed by a downwardly revised 0.6 percent in June.

Economists had expected factory orders to drop by 0.6 percent compared to the 0.7 percent increase originally reported for the previous month.

The bigger than expected decrease in factory orders reflected a sharp drop in orders for durable goods, which plunged by 1.7 percent in July after climbing by 0.9 percent in June.

Meanwhile, the report said orders for non-durable goods edged up by 0.2 percent in July after rising by 0.4 percent in the previous month.

The Commerce Department also said shipments of manufactured goods were virtually unchanged in July after jumping by 1.0 percent in June.

Inventories of manufactured goods climbed by 0.8 percent in July following a 0.2 percent uptick in the previous month.

With inventories rising and shipments virtually unchanged, the inventories-to-shipments ratio inched up to 1.35 in July from 1.34 in June.


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U.S. Service Sector Growth Accelerates Much More Than Expected

Trading 06 sept 2018 Commentaire »

A report released by the Institute for Supply Management on Thursday showed a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in the month of August.

The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.

"There was a strong rebound for the non-manufacturing sector in August after growth 'cooled off' in July," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

"Logistics, tariffs and employment resources continue to have an impact on many of the respective industries," he added. "Overall, the respondents remain positive about business conditions and the economy."

The bigger than expected increase by the headline index came as the business activity index spiked to 60.7 in August from 56.5 in July and the new orders index surged up to 60.4 from 57.0.

The employment index also edged up to 56.7 in August from 56.1 in July, indicating a modest acceleration in the pace of job growth in the service sector.

Meanwhile, the report said the prices index slipped to 62.8 in August from 63.4 in July, suggesting a modest slowdown in the price of price growth.

The ISM released a separate report on Tuesday showing activity in the manufacturing sector unexpectedly grew at a faster rate in August

The purchasing managers index climbed to 61.3 in August from 58.1 in July, while economists had expected the index to dip to 57.7.


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Dollar Little Changed After U.S. Factory Orders, ISM Survey

Trading 06 sept 2018 Commentaire »

Following the release of U.S. factory orders for July and ISM non-manufacturing composite index for August at 10:00 am ET Thursday, the greenback changed little against its major opponents.

The greenback was worth 111.18 against the yen, 0.9682 against the franc, 1.2946 against the pound and 1.1636 against the euro around 10:03 am ET.


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