EU Bullet Report | NFP paints mixed picture, OIL rallies

Posted On 07 Mar 2016

Tag: AUD, Crude Oil, Gold, US Non-Farm Payrolls

The U.S. non-farm payrolls (NFP) report for February painted a mixed picture of U.S. employment. The American economy added 242,000 jobs far exceeding expectations of around 195,000; the unemployment rate remained unchanged at 4.9% the lowest level in 8 years. The big miss on Friday was on wage growth. Hourly wages in the U.S. decreased 0.12 percent once again putting the possibility of a March Federal Open Market Committee (FOMC) rate hike off the table

Stocks and OIL have risen for yet another week, erasing their 2016 losses. Investors’ sentiments were first lifted as China lowered the so called reserve requirement ratio for banks. Then, ECB rhetorics added to speculation of additional stimulus to be announced this week. Thirdly, a string of lackluster US economic data added to case for Fed to be on hold for the first half of the year at least.

OIL: Stabilization in stock markets has also given OIL a boost which extended the rally to $36.70. Resistance 37.50 38.60

Gold: rode on USD weakness and broke out of recent range to close at $1260 after reaching as high as $1279. Bias is still to the upside as long as $1248 holds. Resistances 1280 1291

Asian shares: Hit 2 month high after solid US NFP report. Chinese markets edged up slightly after Prime Minister Li Keqiang on Saturday spelled out a new five-year economic plan, which included an average economic growth target of 6.5 to 7 percent.

AUD: AUD approached a new year’s high against USD. Moreover, it boasted a month high against the JPY, reacting to overnight’s crude recovery.Resistances 0.7460 0.7495 0.7530

This week, the key event in Europe is the ECB meeting where our call of a 10bp rate cut, frontloading of QE and introduction of a two-tier deposit rate system are close to consensus.

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