The
Trump administration’s unpredictability on trade has clearly dealt a blow to
sentiment and this continues to be reflected across global equity markets.
Asian stocks concluded mixed this morning due to renewed trade worries
encouraging investors to adopt a guarded approach. Although European equities
have inched higher, the upside may be limited caution ahead of the release of
the US jobs report for July.
Will July’s US
jobs report push the Dollar higher?
Dollar
bulls were injected with fresh inspiration this week after the Federal
Reserve’s hawkish policy statement for August reinforced market expectations of
higher US interest rates. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Today’s
key risk event for the Dollar will be the jobs report for July, which could
offer fresh insight into the health of the labour markets. The US economy is
expected to have created 193k jobs in July, with average earnings up by 0.3%,
while unemployment is projected to remain steady at 4%.
While
every piece of the US jobs report is highly important, there will be a strong
focus on wage growth figures, as signs of accelerating wage growth may fuel
speculation of inflationary pressures rising. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Building inflationary pressures in the United States are likely to heighten
speculation over the Federal Reserve adopting a more aggressive approach
towards monetary policy normalization. With the Dollar heavily influenced by
monetary policy speculation, expectations of higher US interest rates could
translate to further upside.
Technical
traders will continue to closely observe how the Dollar Index behaves above the
95.00 level. A solid weekly close above 95.00 could encourage an incline
towards 95.50 and 96.10, respectively.
Commodity
spotlight – Gold
A
broadly stronger Dollar has offered nothing but pain and misery to Gold, which
tumbled to a fresh yearly low below $1206 during Friday’s trading session. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
It is
becoming quite clear that market expectations over higher US interest rates
have dented appetite for the zero-yielding metal. Gold’s pain could be intensified
today, depending on how markets react to the US jobs report that will be
released this afternoon. With the precious metal already heavily bruised, a
strong jobs report may throw the knockout blow for prices to dip below $1200.
From a technical standpoint, Gold remains under pressure on the daily charts.
The downside momentum could send prices towards $1200 in the near term.
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