Retreat is taking over the market with USD,Oil and Gold in the lead

October 11, 2016

US Dollar retreats after climbing to a two-month peak on Friday as the September payrolls signalled a slump in the labour force growth and slack in employment. The currency index met the NFP at 97.00 but faced a sharp selloff as the change in Non-Farm payrolls missed forecasts by 11K at 156K while the unemployment retreated from the peaks of 4.9% and 5.0% in September. The month-to-month changes in wages were also disappointing, with growth slowing down to 0.2% compared to the 0.3% in the preceding month.

Positive employment shifts in Canada pushed the CAD up from 1.3285 to a 1.32 level, against the US Dollar. The pair reversed gains later on Friday at the New York session. On Monday the Canadian currency resumed strengthening, gaining +0.26% against the Dollar in early London trading.

Gold bounced on Monday after renewing lows on Friday, falling to a $1,246 level, lowest since the start of June. The Gold extends decline on the rising chance of a rate hike in December with increasing borrowing costs on US Dollar cutting yields from Gold. Despite the lower than expected NFP report, 156K new jobs came to be in September and unemployment was near a 5.0%, which should be consistent with the FED economic outlook for the policy tightening in December.

The British pound slowed declines amid the “hard Brexit” fears, trading -0.15% lower at 1.2418 level. Te European currency slid 0.28% to 1.1170. The concerns of losing access to European single market urged the UK companies to address a joint petition of the UK government to retain the free trading with EU after the formal exit, reported BBC.

The lobbyists warn that switching to WTO rules in trading with EU will lead to a rise in the prices of the majority of the goods being sold in the UK. The food cost may rise by an average of 20%, and cars – by 10%. The business community calls on the British Government to ensure compliance with the transitional period without having to deal with any significant changes in the trade rules.

The Oil price gave up Friday’s gains as traders brace for the IEA report to get a clue on the demand and consumption outlook of the agency. The WTI dipped below $50 while Brent fell slightly but still trades near $52 per barrel.

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