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Gold advances on dollar retreat after U.S. jobs data

“Believe you can and you’re halfway there.” — Theodore Roosevelt

 

 

 HEADLINES

 

 

  • Dollar eases from 20-year high as market digests jobs report
  • Gold advances on dollar retreat after U.S. jobs data
  • Oil climbs ahead of OPEC+ meeting next week
  • Dow erases a 370-point gain to trade lower, on track for third straight weekly loss
  • 2-year Treasury yield declines from 14-year high after jobs report comes in as expected
  • USD/TRY to head higher towards 25 over the next 12 months – Danske Bank
  • GBPJPY Near Term: Upside favored

 

Dollar eases from 20-year high as market digests jobs report

 

 

The dollar edged back from a 20-year high on Friday as traders digested a report that showed the pace of hiring rose slightly more than expected in August, giving the Federal Reserve some wiggle room in how aggressively it hikes interest rates later this month.

Nonfarm payrolls rose by 315,000 jobs in August, data showed, topping the consensus forecast of 300,000 jobs by economists polled by Reuters, and marking the 20th straight month of job growth.

The dollar index, which tracks the currency against six counterparts, initially declined on the jobs report, but then reversed course and erased a chunk of its losses.

At 9:15 a.m. Eastern time (1305 GMT), the U.S. currency was down 0.319% at 109.24 , but was still on track for its third-straight weekly gain.

 

 

COMMODITIES

 

 

Gold advances on dollar retreat after U.S. jobs data

 

 

Gold bounced over 1% on Friday as the dollar retreated after U.S. jobs data was mostly in line with expectations, but was still bound for a third consecutive weekly fall pressured by an elevated interest rate environment.

Spot gold rose 1.2% to $1,716.29 per ounce by 11:14 a.m. EDT (1514 GMT). Prices were still down 1.2% for the week so far.

U.S. gold futures gained over 1% to $1,727.90.

 

 

ENERGY

 

 

Oil climbs ahead of OPEC+ meeting next week

 

 

Oil prices rose on Friday on expectations that OPEC+ will discuss output cuts at a meeting on Sept. 5, though concern over China's COVID-19 curbs and weakness in the global economy loomed over the market.

Brent crude futures rose $1.62, or 1.8%, to $93.98 a barrel by 1:22 p.m. EDT (1722 GMT), while U.S. West Texas Intermediate (WTI) crude futures rose $1.22, or 1.4%, to $87.83 a barrel.

Both benchmarks slid 3% to two-week lows in the previous session. Brent was on course for a weekly drop of 7%, and WTI of 5.7%.

 

 

STOCKS

 

 

Dow erases a 370-point gain to trade lower, on track for third straight weekly loss

 

 

Stocks fell on Friday and headed for their third straight weekly decline as a solid August jobs report failed to ease fears that the Federal Reserve would keep aggressively hiking interest rates to fight inflation, tipping the economy into a recession.

The Dow Jones Industrial Average erased a 370-point gain and turned red in afternoon trading. It last fell 202 points. The S&P 500 also fell into negative territory, last trading down 0.7%. The Nasdaq Composite declined 1.1%

The major averages are set to end the week lower, and notch their third negative week in a row after slumping in the last days of August. The Dow and S&P are heading to declines of 2.2% and 2.6%, respectively, while the Nasdaq is on track to close the week 3.6% lower.

 

 

2-year Treasury yield declines from 14-year high after jobs report comes in as expected

 

 

The yield on the 2-year Treasury note ticked lower on Friday after August’s jobs report came in near expectations and eased some fears that a hot labor market would force the Federal Reserve to continue hiking rates at an aggressive pace in order to tame surging prices.

Treasury yields have been on a tear in recent days, with the 2-year yield climbing to 3.55% and hitting its highest since 2007. After closing at 3.04% last week, the 10-year yield jumped above 3.29% on Thursday as investors bet on a more aggressive Federal Reserve.

Those moves seemed to cool on Friday, with the yield on the 2-year Treasury last down 11 basis points at 3.412%. The yield on the 10-year Treasury fell 6 basis points to 3.199%, while the yield on the 30-year was down 2 basis points to 3.349%.

 

 

ANALYSIS

 

 

USD/TRY to head higher towards 25 over the next 12 months – Danske Bank 

 

 

“We think the combination of global financial tightening, rising budget deficits and substantial refinancing needs at the private sector in the context of already-tight FX liquidity could push USD/TRY to 25 in the next 12M.”

“In the absence of a policy turnaround ahead of the June 2023 election, the burden on Turkey’s public finances will grow while growth momentum is slowing down.”

“In the longer term, Turkey’s economy could have a lot to gain (or lose) depending on how successfully it navigates the new geopolitical world order.”

 

 

CHART

 

 

GBPJPY Near Term: Upside favored

 

 

Technical View: Long position above 161.86. Target 163.21. Conversely, break below 161.86, to open 161.25.

Comments: The pair remains supported. Further advance favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/europe/dollar-two-decade-high-payrolls-loom-2022-09-02/
https://www.reuters.com/article/global-precious/precious-gold-advances-on-dollar-retreat-after-u-s-jobs-data-idUSL4N3092GW
https://www.reuters.com/business/energy/oil-climbs-ahead-opec-meeting-next-week-2022-09-02/
https://www.cnbc.com/2022/09/01/stock-futures-are-flat-ahead-of-key-august-jobs-report-due-friday.html
https://www.cnbc.com/2022/09/02/us-bonds-2-year-treasury-yield-comes-off-2007-highs.html
https://www.fxstreet.com/news/usd-try-to-head-higher-towards-25-over-the-next-12-months-danske-bank-202209021218
 

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