U.S. Dollar Recovers From Two-And-A-Half Year Low, Edges Higher

Trading 05 Déc 2020 Commentaire »

After falling to a two-and-a-half year low early in the day, the U.S. recovered over the course of trading on Friday.

The U.S. dollar index fell to a low 90.48 in morning trading but rebounded and is currently up 0.1 percent at 90.79.

The greenback is trading at 104.15 yen versus the 103.84 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2120 compared to yesterday's $1.2144.

The volatility on the day came as traders reacted to a report from the Labor Department showing much weaker than expected job growth in the month of November.

The Labor Department said non-farm payroll employment rose by 245,000 jobs in November after jumping by a downwardly revised 610,000 jobs in October.

Economists had expected employment to increase by 469,000 jobs compared to the addition of 638,000 jobs originally reported for the previous month.

Despite the weaker than expected job growth, the unemployment rate dipped to 6.7 percent in November from 6.9 percent in October. The unemployment rate was expected to edge down to 6.8 percent.

However, the bigger than expected drop in the unemployment rate came as a 400,000-person decline in the labor force far outpaced the 74,000-person drop in the household measure of employment.

"The latter is not too much of a concern given it follows a 2.3 million gain in October, but the drop in the labor force, which is now 4 million below its pre-pandemic level, is a worrying sign that the unemployed are giving up looking for work," said Michael Pearce, U.S. Senior Economist at Capital Economics.

While the data reflects the economic impact of the recent spike in coronavirus cases, traders seem optimistic the report will spur lawmakers in Washington to finally pass a new fiscal stimulus bill.

In a post on Twitter, Senate Minority Leader Chuck Schumer, D-N.Y., said the jobs data "shows the need for strong, urgent emergency relief is more important than ever."

House Speaker Nancy Pelosi, D-Calif., also claimed that the weaker than expected job growth has created "momentum" toward a stimulus deal.

Democratic and Republican leaders have resumed negotiations over a new stimulus bill, although it remains to be seen if they can reach an agreement after months of stagnation.

In other economic news, a report released by the Commerce Department showed the U.S. trade deficit widened in the month of October.

The report said the trade deficit widened to $63.1 billion in October from a revised $62.1 billion in September. Economists had expected the deficit to widen to $64.8 billion from the $63.9 billion originally reported for the previous month.

The Commerce Department also released a separate report showing new orders for U.S. manufactured goods increased for the sixth consecutive month in October.


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Oil Prices Advance On News Of OPEC Agreement

Trading 05 Déc 2020 Commentaire »

Oil prices moved higher on Friday as OPEC and Russia cleared the hurdle of exiting the current oil output cuts in a coordinated way.

Benchmark Brent crude added 0.39 percent to $49.01 a barrel, while West Texas Intermediate crude futures were up 1 percent at $45.92.

OPEC and other oil producing countries such as Russia and Saudi Arabia agreed to increase output beginning next month at a much slower pace to overcome coronavirus-induced demand concerns.

The oil producers have reached an agreement to pare current production cuts from January by 500,000 barrels per day and agreed to hold monthly meetings to assess market conditions and decide on further adjustments for the following month.

Meanwhile, there are greater hopes for the oil demand recovery amid signs that U.S. may be closing in on new stimulus.

The dollar eased as a bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress, with conservative lawmakers expressing their support.


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Gold Eases On US Stimulus Hopes

Trading 05 Déc 2020 Commentaire »

Gold prices held steady on Friday as rising Covid-19 cases in the U.S. as well as signs of progress on U.S. economic stimulus talks helped lift the allure of the safe-haven metal.

Spot gold was down 0.9 percent at $1,835.90 per ounce, while U.S. gold futures were down 0.5 percent at $1,840.60.

The United States has set a new world record for the number of coronavirus cases and hospitalizations reported in a single day.

The country recorded more than 14 million confirmed infections as of Thursday with over 100,000 patients hospitalized for the first time, in a sign that the virus is spreading at an alarming rate.

California Governor Gavin Newsom announced plans for a regional stay-at-home order and warned of widespread lockdowns across the state to contain the pandemic.

The dollar eased as a bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress, with conservative lawmakers expressing their support.

U.S. House speaker Nancy Pelosi and Senate Democrat leader Chuck Schumer said they "could come to an agreement" based on the $908bn (?674bn) plan devised by a bipartisan group of lawmakers.


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Treasuries Give Back Ground Following Weaker Than Expected Jobs Data

Trading 05 Déc 2020 Commentaire »

Treasuries moved back to the downside during trading on Friday, more than offsetting the rebound seen in the previous session.

Bond prices climbed off their worst levels in afternoon trading but remained firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.9 basis points to 0.969 percent after hitting an eight-month intraday high of 0.986 percent.

The pullback by treasuries came following the release of a report from the Labor Department showing much weaker than expected job growth in the month of November.

The Labor Department said non-farm payroll employment rose by 245,000 jobs in November after jumping by a downwardly revised 610,000 jobs in October.

Economists had expected employment to increase by 469,000 jobs compared to the addition of 638,000 jobs originally reported for the previous month.

Despite the weaker than expected job growth, the unemployment rate dipped to 6.7 percent in November from 6.9 percent in October. The unemployment rate was expected to edge down to 6.8 percent.

However, the bigger than expected drop in the unemployment rate came as a 400,000-person decline in the labor force far outpaced the 74,000-person drop in the household measure of employment.

"The latter is not too much of a concern given it follows a 2.3 million gain in October, but the drop in the labor force, which is now 4 million below its pre-pandemic level, is a worrying sign that the unemployed are giving up looking for work," said Michael Pearce, U.S. Senior Economist at Capital Economics.

While the data reflects the economic impact of the recent spike in coronavirus cases, traders still moved out of the relative safety of bonds amid optimism the report will spur lawmakers in Washington to finally pass a new fiscal stimulus bill.

In a post on Twitter, Senate Minority Leader Chuck Schumer, D-N.Y., said the jobs data "shows the need for strong, urgent emergency relief is more important than ever."

House Speaker Nancy Pelosi, D-Calif., also claimed that the weaker than expected job growth has created "momentum" toward a stimulus deal.

Democratic and Republican leaders have resumed negotiations over a new stimulus bill, although it remains to be seen if they can reach an agreement after months of stagnation.

In other economic news, a report released by the Commerce Department showed the U.S. trade deficit widened in the month of October.

The report said the trade deficit widened to $63.1 billion in October from a revised $62.1 billion in September. Economists had expected the deficit to widen to $64.8 billion from the $63.9 billion originally reported for the previous month.

The Commerce Department also released a separate report showing new orders for U.S. manufactured goods increased for the sixth consecutive month in October.

Next week's trading may be driven by reaction to developments on the stimulus front, although traders are also likely to keep an eye on reports on consumer and producer price inflation and consumer sentiment.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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