UK jobs report in focus, Gold slips

13 December, 2017

UK jobs report in focus, Gold slips

The British Pound’s appreciation against the Dollar was short lived during Tuesday’s trading session as investors evaluated the likely impact of UK inflation climbing to its highest level in almost six years.

Consumer price inflation rose 3.1% in November, up from 3.0% in October, on the back of rising costs of food, transportation, and clothing. With inflation checking in at more than 1% above the Bank of England’s 2% target, Mark Carney will have to pen out an explanatory letter to Chancellor Philip Hammond. Taking a closer look at Sterling’s price action following the release, there is a suspicion that the depreciation was based on investor expectations over November’s inflation figures having little impact on the BoE rate path.

Today’s main event risk for the British Pound  will be the UK labour report which is expected to show the unemployment rate hitting a new 42 year low, at 4.2% in the three months to October and average earnings jumping to 2.5% from 2.2%. Although Britain’s unemployment rate remains encouraging, sentiment could easily take a hit if wage growth fails to meet market estimations. A situation where pay growth fails to pick up is likely to continue squeezing consumers, especially in view of inflation jumping to its highest level in almost six years at 3.1%.

Sterling was slightly shaky against the Dollar during Wednesday’s trading session, with prices trading around 1.3320 as of writing. A disappointing UK jobs report may encourage bears to challenge 1.3300 which could result in a further decline towards 1.3230. Alternatively, bulls need to break back above 1.3380 to open a path to 1.3430.

Commodity spotlight – Gold

Gold was thoroughly pummelled by sellers last week, thanks to a growing sense of optimism over US tax reforms. The yellow metal extended losses during Tuesday’s trading session, with prices tumbling towards a near five-month low at $1237 as the US Dollar stabilized. With investors marching into the trading week with a risk-on attitude, Gold remains susceptible to further losses.

Much attention will be directed towards the FOMC policy statement on Wednesday, which has the ability to impact Gold’s trajectory this week. While it is widely expected that the Federal Reserve will be raising US interest rates, much focus is likely to be directed towards the tone of the meeting. A hawkish Fed meeting may expose the zero-yielding metal to further losses, with $1230 acting as a level of interest. Alternatively, a statement which expresses concerns over low inflation and a failure to offer fresh insight into the policy outlook beyond 2017, may offer Gold a boost.

From a technical standpoint, the yellow metal remains bearish on the daily charts as there have been lower lows and lower highs. Prices are trading below the daily 20 SMA while the MACD has also crossed to the downside. Previous support around $1250 could transform into a dynamic resistance that opens a path lower towards $1230.


Source link  
Dollar fights for throne

The story behind the Dollar's incredible appreciation in recent days continues to revolve around rising U.S bond yields and easing geopolitical risks...

Dollar bulls dominate markets

The USD has exploded back onto the scene today as USD bulls kicked well into gear and lifted the USD higher against all the major pairs and commodities...

American markets in focus

US markets got a boost today from all the economic data that came out, and the USD did an about face and managed to claw back some ground...


CAD surges further on weaker USD

It was all downhill today for the USDCAD as the USD weakness continued to be a major factor. This comes as China looks to work together...

Commodity currencies shine

The New Zealand dollar has come back into the fray recently, as it looks to be making a push higher on the back of a weaker USD. This has been led...

Will earnings season steal spotlight?

Friday's steep declines in Wall Street driven by weak employment report and a war of words between U.S. & China seem to have been shrugged...


NAFTA talks send CAD higher

It's set to be a big day tomorrow for the Canadian dollar as talks continue to ramp up that NAFTA will all be sorted fairly shortly, and these...

Commodity currencies take centre

The Canadian dollar has got some serious love from the markets today as President Trump has said he wants NAFTA negotiations to be finished...

US dollar pairs back in focus

The Yen has been a hot topic for traders as of late, as the Abenomics devaluation looks to have vanished into thin air with the recent bearish movements...

  


Share: