Crude Oil Futures Settle Higher Again

Trading 04 jan 2019 Commentaire »

Crude oil prices ended sharply higher on Friday, extending gains to a fifth successive session, after stronger than expected U.S. jobs data and an encouraging report on Chinese services sector activity eased concerns about global growth and energy demand prospects.

Hopes that output reductions by major oil producers like Saudi Arabia and Russia would help ease concerns about excess supply in the market contributed as well to oil's uptick.

Oil output from OPEC fell by 530,000 barrels a day to 32.6 million a day last month, a Reuters survey found, marking the sharpest pullback since January 2017 as top exporter Saudi Arabia throttled back production.

Meanwhile, data released by the Energy Information Administration today showed crude inventories in the U.S. rose by 7,000 barrels in the week to December 28, beating expectations for a drop of more than 3 million barrels.

Distillate stockpiles were up by 9.5 million barrels last week, the biggest weekly jump in two years. Gasoline stocks rose by 6.9 million barrels, more than thrice the expected increase.

American Petroleum Institute reported yesterday that U.S. crude inventories fell by 4.5 million barrels during the week ended December 28.

Crude oil futures for February ended up $0.87, or 1.9%, at $47.96 a barrel, extending gains to a fifth successive session.

On Thursday, crude oil futures ended up $0.55, or 1.2%, at $47.09 a barrel. For the week, oil futures gained about 5.8%, the best weekly returns in about 17 months.

China's commerce ministry said that China and the United States would hold vice ministerial level trade talks in Beijing on January 7-8 in a bid to defuse trade tensions.

Data released by Markit said growth in China's services sector edged higher in December. The Caixin/Markit services PMI rose to a six-month high of 53.9 in December from 53.8 in November.

The Labor Department's report showed a much stronger than expected job growth in the U.S. in the month of December. The report said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.


The material has been provided by InstaForex Company - www.instaforex.com

Treasuries Pull Back Sharply On Upbeat Jobs Data

Trading 04 jan 2019 Commentaire »

After moving notably higher over the past few sessions, treasuries pulled back sharply during the trading day on Friday.

Bond prices moved significantly lower early in the day and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 10.5 basis points to 2.659 percent.

With the substantial increase on the day, the ten-year yield bounced well off the more than eleven-month closing low set on Thursday.

The sell-off by treasuries came following the release of a closely watched Labor Department report showing much stronger than expected job growth in the month of December.

The Labor Department said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

Paul Ashworth, Chief U.S. Economist at Capital Economics, suggested the substantial job growth in December would "seem to make a mockery of market fears of an impending recession."

"Admittedly, employment is a coincident indicator, whereas the ISM manufacturing index, which we learned yesterday fell sharply in December, is a leading indicator," Ashworth said.

He added, "But, even allowing for that distinction, this employment report suggests the U.S. economy still has considerable forward momentum."

The report said the unemployment rate rose to 3.9 percent in December from 3.7 percent in November, while economists had expected the unemployment rate to come in unchanged.

However, the unexpected uptick by the unemployment rate came as the labor force jumped by 419,000 people compared to a much more modest 142,000-person increase in the household survey measure of employment.

The Labor Department also said average hourly employee earnings payrolls climbed by 11 cents to $27.48 in December, reflecting a 3.2 percent increase compared to the same month a year ago.

The annual rate of growth in average hourly employee earnings in December accelerated from the 3.1 percent increase seen in November, reaching its highest level since April of 2009.

Next week's trading may be impacted by reaction to reports on service sector activity and consumer price inflation as well as the minutes of the latest Federal Reserve meeting.

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.


The material has been provided by InstaForex Company - www.instaforex.com

Gold Settles Lower As Equities Rise On Trade Talks Hopes

Trading 04 jan 2019 Commentaire »

Gold prices drifted lower on Friday as traders switched over to riskier assets amid optimism that the upcoming U.S.-China trade talks next week will help ease trade concerns.

An encouraging report on services sector activity in China and upbeat U.S. jobs data drove stock prices up north and contributed to the yellow metal's decline.

Meanwhile, the Federal Reserve Chairman Jerome Powell noted the central bank "will be patient" with monetary policy as it watches the economy evolve. Following Powell's dovish remarks, the dollar pared earlier gains and slipped into negative territory.

Gold futures for February ended down $9.00, or 0.7%, at $1,285.80 an ounce.

On Thursday, gold futures ended up $10.70, or 0.8%, at $1,294.80 an ounce, the highest settlement since mid June 2018. For the week, gold futures gained about 0.2%.

Silver futures for March ended at $15.786 an ounce, down $0.011 from previous close. Copper futures for March settled at $2.647 per pound, gaining $0.079 for the session.

China's commerce ministry said that China and the United States would hold vice ministerial level trade talks in Beijing on January 7-8 in a bid to defuse trade tensions.

Data released by Markit said growth in China's services sector edged higher in December. The Caixin/Markit services PMI rose to a six-month high of 53.9 in December from 53.8 in November.

The Labor Department's report showed a much stronger than expected job growth in the U.S. in the month of December. The report said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

Despite the much stronger than expected job growth, the report said the unemployment rate rose to 3.9% in December from 3.7% in November. The unemployment rate had been expected to come in unchanged.

However, the unexpected uptick by the unemployment rate came as the labor force jumped by 419,000 people compared to a much more modest 142,000-person increase in the household survey measure of employment.

Meanwhile, the Federal Reserve Chairman Jerome Powell noted the central bank "will be patient" with monetary policy as it watches the economy evolve. Powell stressed that monetary policy is not on a "preset path" after the Fed raised interest rates four times in 2018 and forecast two rate hikes in the new year.

"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said.

The Fed chief said the central bank is always prepared to significantly shift the stance of monetary policy if incoming economic data does not meet expectations.

Powell's comments came as part of a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Social Science Association annual meeting in Atlanta.


The material has been provided by InstaForex Company - www.instaforex.com

Dollar Mixed Following Strong December Job Growth

Trading 04 jan 2019 Commentaire »

The dollar is turning in a mixed performance against its major rivals Friday afternoon. The buck is losing ground against its major European rivals, but is rising against the Japanese Yen.

The focus this morning was on the stronger than expected U.S. jobs report for December. However, traders also had to contend with comments from Fed Chair Jerome Powell.

Employment in the U.S. spiked by much more than anticipated in the month of December, according to a closely watched report released by the Labor Department on Friday.

The Labor Department said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

Despite the much stronger than expected job growth, the report said the unemployment rate rose to 3.9 percent in December from 3.7 percent in November. The unemployment rate had been expected to come in unchanged.

Federal Reserve Chairman Jerome Powell noted Friday the central bank "will be patient" with monetary policy as it watches the economy evolve.

Powell stressed that monetary policy is not on a "preset path" after the Fed raised interest rates four times in 2018 and forecast two rate hikes in the new year.

"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said.

The dollar rose to a high of $1.1345 against the Euro Friday, but has since retreated to around $1.1410.

Eurozone's consumer price inflation slowed more-than-expected in December to its lowest level in eight months, and the private sector expanded the weakest pace in over four years, damping expectations for an interest rate hike from the European Central Bank in the near term.

The consumer price index rose 1.6 percent year-on-year following a 1.9 percent increase in November, preliminary figures from Eurostat showed on Friday. Economists had forecast 1.8 percent inflation.

Elsewhere, survey data from IHS Markit showed that Eurozone Composite Purchasing Managers' Index, or PMI, fell to 51.1 from 52.7 in November. The final reading was weaker than the flash estimate of 51.3.

Germany's unemployment decreased more-than-expected expected in December, and the jobless rate held steady at a record low, despite the economy showing signs of a slowdown.

The number of unemployed dropped by 14,000, data from the Federal Employment Agency showed on Friday.

That was a bigger fall than the 13,000 decrease economists had predicted. Joblessness had decreased by 16,000 in November.

France's consumer price inflation slowed for a second straight month in December, preliminary figures from the statistical office INSEE showed on Friday. The consumer price index rose 1.6 percent year-on-year following a 1.9 percent increase in November. Economists had forecast 1.8 percent inflation.

The buck reached a high of $1.2615 against the pound sterling Friday, but has since pulled back to around $1.2730.

British services sector expanded at a faster-than-expected pace at the end of 2018 amid modest gains in activity and demand, yet the overall business situation remained subdued, survey data from IHS Markit showed on Friday.

The CIPS UK Services Purchasing Managers' Index rose to 51.2 from November's 50.4, a 28-month low. Economists had forecast a score of 50.7.

UK house mortgage approvals in November decreased more-than-expected from the previous month to its lowest level in seven months, data from the Bank of England showed on Friday.

The number of mortgages approved for house purchase - which lead to future mortgage lending - fell slightly, to 63,728 in November, the bank said. A figure lower than this was last seen in April, when approvals totaled 63,421.

Economists had predicted 66,000 approvals for November.

UK house price inflation slowed sharply in December to its weakest level since early 2013, as buyer confidence eroded amid the persistent uncertainties linked to Brexit, results of a key survey showed on Friday.

The house price index rose 0.5 percent year-on-year following a 1.9 percent increase in November, the Nationwide Building Society reported. Economists had forecast a 1.5 percent increase. In December 2017, house price inflation was 2.6 percent.

The greenback has inched to around Y108.525 against the Japanese Yen Friday afternoon, from a low of Y107.514.

The manufacturing sector in Japan continued to expand in December, and at a faster rate, the latest survey from Nikkei revealed on Friday with a PMI score of 52.6. That's up from the 15-month low of 52.2 in November, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.


The material has been provided by InstaForex Company - www.instaforex.com

Powell: Fed "Will Be Patient" With Rate Hikes As Economy Evolves

Trading 04 jan 2019 Commentaire »

Strong jobs data released earlier in the day helped offset recent concerns about the U.S. economy, although Federal Reserve Chairman Jerome Powell noted Friday the central bank "will be patient" with monetary policy as it watches the economy evolve.

Powell stressed that monetary policy is not on a "preset path" after the Fed raised interest rates four times in 2018 and forecast two rate hikes in the new year.

"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said.

The Fed chief said the central bank is always prepared to significantly shift the stance of monetary policy if incoming economic data does not meet expectations.

Powell's comments came as part of a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Social Science Association annual meeting in Atlanta.

The current Fed Chairman also said he would not resign if asked to do so by President Donald Trump, who has repeatedly criticized the central bank for raising interest rates.

Powell said he had not received any direct communication from the White House and that no meeting with Trump has been scheduled.

Asked about Trump's approach to the Fed, Bernanke suggested "everyone would be better off if it was clear that the Fed is making its decision based on its mandate and on its assessment of long-term needs in the economy."

Powell also noted the Fed "wouldn't hesitate" to make a change to its balance sheet normalization plan if it is causing problems for the financial markets.

"We don't believe that our issuance is an important part of the story of the market turbulence that began in the fourth quarter of last year," Powell said. "But, I'll say again, if we reached a different conclusion, we wouldn't hesitate to make a change."


The material has been provided by InstaForex Company - www.instaforex.com

*U.S. Crude Oil Inventories Remained Virtually Unchanged In Week Ended 12/28

Trading 04 jan 2019 Commentaire »

U.S. Crude Oil Inventories Remained Virtually Unchanged In Week Ended 12/28


The material has been provided by InstaForex Company - www.instaforex.com

*Powell: Fed Will Be Patient, Watching Incoming Data

Trading 04 jan 2019 Commentaire »

Powell: Fed Will Be Patient, Watching Incoming Data


The material has been provided by InstaForex Company - www.instaforex.com

India Service Sector Growth Moderates In December

Trading 04 jan 2019 Commentaire »

India's service sector expanded further, but at a slower rate, in December amid an increase of employment, survey results from IHS Markit showed Friday.

The Nikkei services Purchasing Managers' Index, or PMI, fell to 53.2 in December from 53.7 in November, which was among the strongest recorded in the past two years.

A score above 50 indicates expansion in the sector.

The composite PMI, covering both manufacturing and services, fell to 53.6 from 54.5 in November. Manufacturing expansion was softer in December.

In the service sector, there was an increase in new business. Sales expanded at a slower pace, but was among the strongest recorded in one-and-a-half years.

The employment growth accelerated to the second quickest pace since April, while accumulation in backlogs eased to the weakest in five months.

The rate of output price inflation was marginal, though at a three-month high. Factory gate charges were changed, ending a sixteen-month period of increases.

Cost inflation at services firms softened for the third straight month to the weakest since May 2017 and purchasing prices in the manufacturing industry rose at a slower pace. The level of business confidence in the service sector was the highest seen in three months.


The material has been provided by InstaForex Company - www.instaforex.com

Upbeat Jobs Data Buoys U.S. Dollar

Trading 04 jan 2019 Commentaire »

The U.S. dollar strengthened against its major counterparts in the European session on Friday, as the economy added more than jobs than forecast in December, reducing fears over the health of the economy.

Data from the Labor Department showed that U.S. job growth exceeded forecasts in December, led by job gains in the healthcare, food services and drinking places, construction, manufacturing, and retail sectors.

The non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

The report said the unemployment rate rose to 3.9 percent in December from 3.7 percent in November, while economists had expected the unemployment rate to come in unchanged.

Further underpinning sentiment was news of fresh trade talks between China and U.S.

China's Commerce Ministry said that U.S. deputy trade representative Jeffrey Gerrish would hold talks with Chinese officials on Monday and Tuesday in Beijing. The meeting will be the first since both sides had agreed to a 90-day truce at the G-20 summit in Argentina last month.

Investors await comments from Federal Reserve Chairman Jerome Powell, who is due to participate in a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Science Association Meeting in Atlanta.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the franc and the yen, it held steady against the euro. Against the pound, it declined.

The greenback appreciated to 1.1364 against the euro, after falling to a 2-day low of 1.1419 at 4:15 am ET. The pair was valued at 1.1393 when it closed deals on Thursday. Next key resistance for the greenback is seen around the 1.12 region.

Data from Eurostat showed that Eurozone's consumer price inflation slowed more-than-expected in December to its lowest level in eight months.

The consumer price index rose 1.6 percent year-on-year following a 1.9 percent increase in November. Economists had forecast 1.8 percent inflation.

The greenback was higher at 108.38 against the yen, which marked a 3.5 percent rise from a 9-1/2-month low of 104.66 fetched on Thursday. At yesterday's close, the pair was worth 107.66. The greenback is poised to challenge resistance around the 110.00 level.

Following a decline to 0.9853 against the franc at 4:15 am ET, the greenback reversed its path and moved up to 0.9901. The greenback had finished Thursday's trading at 0.9867 versus the franc. Continuation of the greenback's uptrend may take it to a resistance around the 1.00 level.

Having dropped to a 2-day low of 1.2695 against the pound at 5:15 am ET, the greenback bounced off to 1.2633 following the data. Further uptrend may take the greenback to a resistance around the 1.25 level.

Data from the Nationwide Building Society showed that UK House Price inflation slowed sharply in December to its weakest level since early 2013, as buyer confidence eroded amid the persistent uncertainties linked to Brexit.

The House Price Index rose 0.5 percent year-on-year following a 1.9 percent increase in November. Economists had forecast a 1.5 percent increase.

The greenback firmed to 0.6672 against the kiwi, recovering from a 2-day low of 0.6707 touched at 10:45 pm ET. The greenback was trading at 0.6692 per kiwi at Thursday's close. The greenback is likely to challenge resistance around the 0.64 level, if it rises further.

The greenback bounced off to 0.7026 against the aussie, from a 4-day low of 0.7054 hit at 4:15 am ET. The aussie-pair had ended Thursday's trading at 0.7005. The next likely upside target for the greenback is seen around the 0.675 level.

Although the greenback rose marginally against the loonie following the data, the move was short-lived with the buck trending back near more than a 2-week low of 1.3425 seen at 8:20 am ET. The pair was quoted at 1.3487 at Thursday's close.

In today's events, at 10:15 am ET, Federal Reserve Chair Jerome Powell participates in a panel discussion titled "Federal Reserve chairs: Joint Interview" at the American Economic Association's Annual Meeting in Atlanta.

At the same time, Federal Reserve Bank of Atlanta President Raphael Bostic will participate in a panel discussion titled "The Future of Traditional Banking" at the American Economic Association's Annual Meeting in Atlanta.


The material has been provided by InstaForex Company - www.instaforex.com

Inflation in the eurozone is lagging behind the ECB’s target, which may complicate the rate increase

Trading 04 jan 2019 Commentaire »

9KMz9t0dz8Fx9X1TTQl-EqZqkYCkQhHYKc0beVSW

Inflation slowed more than expected in December and was further away from the ECB target, reinforcing forecasts that interest rates might not rise this year.

According to Eurostat, prices in the eurozone in December increased by 1.6 percent compared to the same period last year, down from 1.9 percent in November. Inflation was constrained by a sharp slowdown in energy prices. The unexpected drop in inflation below the ECB target complicates plans for a possible increase in interest rates. Recall, the regulator promised in December to keep rates at current record-low levels, at least until next summer and did not try to change market expectations that the first increase in interest rates would occur only in early 2020. The December figures reinforced the view that it is not expected to increase this year.

Immediately I recall the recent statement by the ECB official Benoit Coeure that interest rates will remain low until inflation reaches its goal. While there is no reason for this. Although the recent acceleration in wage growth might well have been, fears that inflation in the energy sector is likely to continue to decline, overall inflation is likely to fall to about 1 percent by the middle of the year.

The material has been provided by InstaForex Company - www.instaforex.com