Dollar Stays Firm Against Peers

Trading 09 Jan 2021 Commentaire »

The U.S. dollar firmed up against its peers on Friday, after exhibiting some weakness in the European session.

The dollar's weakness early on in the day was due to an unexpected drop in U.S. employment in December due to rising coronavirus cases and restrictions pausing recovering in the labor market.

Data from the Labor Department showed that non-farm payroll employment fell by 140,000 jobs in December after climbing by an upwardly revised 336,000 jobs in November.

The decline surprised economists, who had expected employment to increase by about 71,000 jobs compared to the addition of 245,000 jobs originally reported for the previous month.

The unemployment rate came in at 6.7% in December, unchanged from November. Economists had expected the unemployment rate to inch up to 6.8%.

The dollar index, which dropped to 89.66 earlier in the day, however rallied to 90.25 by mid afternoon before paring some gains. It was last seen at 90.08, up nearly 0.3% from previous close.

Against the Euro, the dollar firmed up to $1.2223, gaining nearly 0.4%. The euro area unemployment rate declined slightly in November, dropping to 8.3% from 8.4% a month earlier. The unemployment rate was 7.4% in November.

The Pound Sterling was slightly weak, fetching $1.3558 a unit, compared to $1.3564 Thursday evening.

The Yen weakened to 103.96 a dollar. Japan's leading index rose to its highest level in nearly two years in November, preliminary data from the Cabinet Office showed. The leading index, which measures the future economic activity, grew to 96.6 in November from 94.3 in October.

Against the Aussie, the dollar was up marginally with the AUD-USD pair at 0.7760. Australia had a merchandise trade surplus of A$5.022 billion in November. That was shy of expectations for a surplus of A$6 billion and down from the downwardly revised A$6.583 billion in October (originally A$7.456 billion).

The Swiss franc was up slightly against the dollar, at CHF 0.8857. Switzerland's jobless rate came in at a seasonally adjusted 3.4% in December, data from the State Secretariat for Economic Affairs, or SECO, showed. On an unadjusted basis, the unemployment rate rose to 3.5% in December from 3.3% in the previous month. Economists had forecast a rate of 3.4%.

The Loonie was weaker at 1.2701, after closing at 1.2691 on Thursday. Data released by Statistics Canada showed the Canadian economy shed about 63,000 jobs in December 2020, much larger than an expected drop of 27,500 jobs. In November, the economy had added 62,100 jobs. Employment dropped for the first time since April 2020.

While part-time jobs fell by about 99,000, full-time employment went up by less than expected 36,500 in December. The unemployment in December was up slightly at 8.6% compared to 8.5% in November.


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Oil Futures Spurt 2.8%, Post Best Finish In About 11 Months

Trading 09 Jan 2021 Commentaire »

Crude oil prices rose sharply on Friday, as recent data showing a drop in U.S. crude stockpiles, and Saudi Arabia's decision to cut output continued to support the commodity.

Despite the continued surge in coronavirus cases and tighter lockdown measures in several countries, traders appeared to be pinning their hopes of recovery amid massive rollout of Covid-19 vaccines, and on prospects for additional fiscal stimulus.

West Texas Intermediate Crude oil futures for February ended up by $1.41 or about 2.8% at $52.24 a barrel, the highest level since February 2020.

Brent crude futures were up $0.95 or about 1.8% at $55.36 a barrel.

WTI futures gained about 7.7% in the week, while Brent crude contracts firmed up by more than 8%.

Earlier this week, Saudi Arabia made a surprise announcement, saying it would reduce crude output by 1 million barrels a day in February and March.

This significantly offset OPEC+'s decision to allow Russia and Kazakhstan to increase their outputs by a combined 75,000 barrels a day.

Data released by Baker Hughes today said the oil drilling rigs count in the U.S. rose for a seventh straight week, surging up by 8 to 275 this week.


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Treasuries See Further Downside Amid Optimism About More Stimulus

Trading 09 Jan 2021 Commentaire »

Treasuries moved to the downside during trading on Friday, extending the sharp decline seen over the past several sessions.

Bond prices climbed off their worst levels in afternoon trading but remained in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.4 basis points to 1.105 percent.

With the continued increase on the day, the ten-year yield ended the session at its highest closing level since mid-March.

The continued weakness among treasuries came amid optimism that a Democrat-controlled government will lead to more fiscal stimulus and a better handling of the coronavirus vaccine rollout.

In a statement on Thursday, President Donald Trump finally acknowledged "a new administration will be inaugurated on January 20th," although he declined to mention President-elect Joe Biden by name.

Trump has repeatedly refused to accept the outcome of the election, spouting fraudulent claims of widespread voter fraud that inspired his supporters to assault the U.S. Capitol building on Wednesday.

Traders seem hopeful for a return to normalcy, as Democrats will control both houses of congress and the White House but do not have the margin in the Senate to force through radical legislation.

The markets were also reacting to a closely watched Labor Department report showing an unexpected decrease in U.S. employment in the month of December.

The Labor Department said non-farm payroll employment fell by 140,000 jobs in December after climbing by an upwardly revised 336,000 jobs in November.

The decline surprised economists, who had expected employment to increase by about 71,000 jobs compared to the addition of 245,000 jobs originally reported for the previous month.

Employment decreased for the first time since April as the recent surge in coronavirus cases led to a nosedive in employment in the leisure and hospitality sector, which lost 498,000 jobs.

Traders have recently been looking on the bright side of almost every piece of news and may see the weak jobs data as more ammunition for Democrats to pursue additional stimulus.

Next week's economic calendar starts off relatively light, although reports on consumer and producer prices, retail sales, industrial production and consumer sentiment are likely to attract attention later in the week.

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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Gold Futures Settle Sharply Lower As Dollar, Treasury Yields Rise

Trading 09 Jan 2021 Commentaire »

Gold prices plummeted and the most active gold futures contract posted its biggest single-session drop since November on Friday, as the dollar strengthened and benchmark treasury yields rose.

Optimism about economic recovery amid rollout of coronavirus vaccines and additional stimulus prompted investors to seek riskier assets.

The dollar index rose to 90.25, rebounding sharply from a low of 89.66 it touched early on in the day. It was last seen hovering around 90.20.

Gold futures for February ended down $78.20 or about 4.1% at $1,835.40 an ounce, the lowest settlement since mid-December.

In terms of percentage loss, gold futures suffered their biggest decline today since November 9.

Silver futures for March ended down $2.624 at $24.637 an ounce, while Copper futures for March settled with a loss of $0.0225 at $3.6735 per pound.

On the political front, Democrats, who now have control over the U.S. Senate, have the chance to expand the scope of what Biden can achieve as part of his energy transition agenda from coronavirus relief to infrastructure spending.

In economic news,the Labor Department said non-farm payroll employment fell by 140,000 jobs in December after climbing by an upwardly revised 336,000 jobs in November.

The decline surprised economists, who had expected employment to increase by about 71,000 jobs compared to the addition of 245,000 jobs originally reported for the previous month.

Employment decreased for the first time since April as the recent surge in coronavirus cases led to a nosedive in employment in the leisure and hospitality sector, which lost 498,000 jobs.


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*U.S. Consumer Credit Increases By $15.3 Billion In November

Trading 09 Jan 2021 Commentaire »

U.S. Consumer Credit Increases By $15.3 Billion In November


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