Economic Data – Focus will be on Non-Farm Employment data today
Global commodities witnessed a speculative move yesterday. Yellow metals retreated from the day’s high after the dollar rebounded in anticipation of key nonfarm payrolls data, while other economic readings showed some strength in the labor market..
The dollar rebounded from a nine-month low after the readings, given that relatively high inflation could keep the Fed raising interest rates this year- a negative scenario for gold and metal markets.
The yellow metal marked wild swings in recent sessions, and was set to break a six-week gaining streak as investors re-evaluated their expectations of U.S. monetary policy.
MCX Gold Future retreated from day’s high of 58847 and settled at 57695. Comex Gold future slipped from high $1959.74 settled at $1912.30 an once.
The better-than-expected unemployment claims reading, coupled with fears of strong nonfarm payrolls data later today, saw investors reevaluate their bets that inflation will slow at a quicker-than-expected pace.
This saw the dollar recover sharply against a basket of currencies on Thursday. The greenback was also aided by weakness in the. Euro and the British pound, after their respective central banks hinted at a potential end to their rate hike cycles.
The European Central Bank raised interest rates by another 50 basis points on Thursday and flagged its intention to hike rates by the same amount again in March, as policymakers remain focused on corralling elevated inflation despite recent data suggesting that prices may be peaking in the Eurozone.
The decision, which was widely expected by markets, brings the interest rates on the ECB’s main refinancing operations, marginal lending facility, and deposit facility up to 3.00%, 3.25%, and 2.50%, respectively. The changes will come into effect from February 8.
Meanwhile, the ECB confirmed its December decision to wind down its asset purchase program by €15 billion (€1 = $1.0938) per month on average from the beginning of March until the end of June 2023.
MCX Crude oil plunged more than 2.80% and settled at 6281. Crude Oil prices edged lower as U.S. industrial-linked factory orders dipped, while the dollar strengthened, making crude more expensive for non-American buyers.
Brent crude futures fell 52 cents, or 0.6%, to $82.32 a barrel by 11:04 a.m. ET (1604) GMT, while West Texas Intermediate crude (WTI) lost 40 cents to $76.01, or 0.5%.
Today, the Economic calendar starts at 7.15am with China Caixin Services PMI, which could have a positive impact for Metals. Data foreseen at 51.1, higher from previous 48.00.
At 1.15pm – French Industrial Production m/m to be released. Data is foreseen lower at 0.2%, from previous 1. Data could have a negative impact on Euro and Bullions.
Furthermore, at 1.45.pm – Spanish Services PMI could bring positive momentum for Euro. As data is foreseen slightly higher at 52.5 vs. previous 51.6.
At 2:pm – Swiss National Bank Gov Board Member Maechler Speaks could have a volatile impact on the market.
Moreover, at 2.15pm – Italian Services PMI data to be released. Data foreseen slightly higher at 50.9, from previous 49.90.
At 2.15 and 2.20pm- French Final Services PMI and German Final Services PMI to be released. Both data are expected to have a neutral impact on the Euro. As both data foreseen unchanged from previous at 49.2 and 50.4, consequently.
At 2.30pm – Euro zone Final Services PMI could have a neutral impact on Euro. As data is foreseen at 50.7, unchanged from previous.
Furthermore, at 3.00pm – UK Final Services PMI could have a neutral impact on Euro. Data foreseen unchanged from previous at 48.0.
At 7.00 pm – US Average Hourly Earnings m/m data to be released. Data could have a neutral impact on dollar and bullions. Data foreseen at 0.3% unchanged from previous.
At the same time, Non-Farm Employment Change data could cause clutter for the market. Data foreseen lower from previous at 193k vs previous 223k.
Unemployment Rate data to be released. Data is foreseen higher at 3.6% compared to previous 3.5%, which could have a negative impact on dollar and positive for bullion.
At 8.30pm – US ISM Services PMI is to be released. Data foreseen slightly higher at 50.5 from previous 49.6, which could have a positive impact on dollar.