Friday saw the release of the all-important NFP report which revealed that the US economy added only 38.000 jobs instead of 170.000 expected. This was a huge blow to the probability of raising interest rates in June or even July, so market reaction has punished the USD across the board. The week will contain relatively few economic releases to guide markets further. However, Fed chair Janet Yellen is speaking today. Financial markets will also concentrate on the UK EU referendum.
Currencies: USD was hammered following the dismal release of NFP, which eliminated the chance of a June rate hike by the FED. USDJPY dropped from 108.87 all the way to 106.38 while EURUSD surged from 1.1141 to 1.1372. In the meantime, GBPUSD rose all the way to 1.4410 to 1.4580 only to collapse this morning to 1.4381 after 2 separate UK surveys showed that the “leave” group was ahead in the polls. Polls will remain the key driver ahead of the referendum. The Australian dollar surged nearly 2 % on Friday but shed about a third of that gains in Monday Asian trade to trade at $0.7326.
Stocks: Shares in Asia were mostly weaker on Monday as investors kept a close eye on talks held annually between the U.S. and China and awaited remarks later in the day by Fed Chair Janet Yellen. At the close in NYSE, the DJ lost 0.18%, while theSP500 declined 0.29%, and the NASDAQ declined 0.58%.
Oil and GOLD: Oil has mainly been unchanged following the NFP report and last week’s uneventful OPEC meeting. The price is still hovering around the $50 mark. On the other hand, GOLD has shot up to $1241 (peaked at $1247) from $1211 after the NFP. The over $30 rise in Gold’s price did not come as a surprise after such a bad NFP, as the metal trades inversely correlated with USD’s value. (Lower USD – higher GOLD and vice versa).
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