News

Dollar Trims Jobs Data Losses, US Futures Ease

USD

The dollar index which measures the greenback against a basket of major currencies inched higher to 90.26, recovering from sharp losses incurred on Friday. The US jobs report came short of expectations, the US economy created only 559 thousand jobs, whereas the consensus was around 650 thousand, the Unemployment rate fell to 5.8% as the participation rate ticked lower to 61.6% from 61.7%, while average hourly earnings rose 0.5% month over month. The job creation is not as solid as the market expected, still a good reading, but failed to raise the chances of Fed tapering asset purchases soon. Market participants will look forward to the consumer price index data ahead of the FOMC meeting next week. The EURUSD declined to $1.2145, the GBPUSD dropped to $1.4116, and the USDCAD rallied to 1.2104.

Equities

Futures tied to major US stock indices kicked off the week on a soft note, as the G7 agreed on global tax reform. The World's largest corporations (US companies are a big chunk) will have to pay a minimum of 15% tax on their earnings. Previously, companies were escaping taxes over overseas sales in different ways, but now it will be different, although 15% remains lower than Biden's initial tax suggestion. The Dow Jones Industrial Average futures fell to 34649, the S&P500 futures dropped to 4212, and Nasdaq futures declined to 13709.

Metals

Precious metals prices shot higher on Friday following the US jobs report miss as the market disregarded chances of early asset tapering by the Federal Reserve. On the weekend, the Treasury secretary Janet Yellen supported Biden's plans of expenditure and welcomed any slight rise in interest rates. The price of a gold ounce pared partial gains, after testing a high of $1896, gold is now trading around $1882, the price of a silver ounce fell to $27.49, and palladium hovered near $2840.

Oil

Oil prices eased from their highs as investors anticipate the nuclear deal negotiations. The World's Superpowers and Iran will conclude the fifth round of negotiations on the 10th of June. The market is concerned whether the Iran supplies that will invade the markets post a deal overshadow the oil demand recovery around the world. The West Texas Intermediate crude July contract fell to $68.91 after trading at $69.98, the highest since October 2018, and the Brent blend August contract dropped to $71.08 from $72.25.

Major Economic Events

GMT Country Event Expectation Previous

8:00

UK

Halifax House Price Index (MoM) (May)

1.2%

1.4%

8:30

EZ

 Sentix Investor Confidence (Jun)

26

21

 

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