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Gold loses shine on strong dollar, Fed rate hike bets

 

“Success is the sum of small efforts – repeated day in and day out.” — Robert Collier 

 

 

HEADLINES

 

 

  • Sterling enjoys a small lift as Boris Johnson quits
  •  Gold attempts rebound as dollar stalls ascent
  • Oil up $5 as tight supply outweighs recession fears
  • Wall Street rises as traders temper bets on aggressive rate hikes
  • Euro continues to slide toward dollar parity — and could fall even further
  • USD/ZAR: Potential for upside to 17.7836 – Credit Suisse
  • EURUSD Short Term: Downside favored

 

 

Dollar gains after U.S. payrolls beat forecast

 

 

The U.S. dollar rose on Friday after data showed the world's largest economy created more jobs than expected in June, cementing expectations of another 75 basis-point hike at the Federal Reserve's policy meeting later this month.

Earlier in the session, the greenback hit a fresh two-decade high against a basket of currencies, led by gains against the euro amid signs the euro zone economy will tip into recession. The dollar has hit consecutive 20-year peaks this week, gaining in five of the last six weeks.

The dollar index was last up 0.3% at 107.30.

 

 

COMMODITIES

 

 

Gold loses shine on strong dollar, Fed rate hike bets

 

 

Gold was on course to fall for a fourth straight week on Friday, hurt by the dollar’s ascent and as bets for steep interest rate hikes gained traction after healthy U.S. jobs data.

Spot gold was up 0.2% at $1,742.40 per ounce by 3:15 p.m. ET. Bullion has lost about 3.7% so far this week, which would be its worst since mid-May. U.S. gold futures settled up 0.1% at $1,741.2.

Lately, gold has failed to attract safe-haven flows despite growing recessions risks as investors have instead opted for the dollar, which has marched to fresh two-decade highs.

 

 

ENERGY

 

 

Oil rises 2% but posts weekly loss on recession fears

 

 

Oil prices rose about 2% in volatile trade on Friday but were still heading for a weekly decline as investors worried about a potential recession-driven demand downturn even as global fuel supplies remained tight.

Central banks around the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle growth, while mass COVID-19 testing in Shanghai this week caused worries about potential lockdowns that could also hit oil demand.

Brent crude futures rose $2.37, or 2.3%, to settle at $107.02 a barrel. U.S. West Texas Intermediate crude rose $2.06, or 2%, to settle at $104.79 a barrel. Both benchmarks traded in negative territory and then rebounded from session lows.

 

 

STOCKS

 

 

Stocks dip, yields climb as rate hikes loom following strong U.S. jobs report

 

 

Wall Street was lower on Friday as Treasury yields jumped following a stronger than expected U.S. jobs report, which suggested the Federal Reserve may push further rate hikes to cool the economy and slow inflation.

Strong data from the U.S. Labor Department, which reported the United States added more jobs than expected in June, indicated a recession was not yet imminent amid persistent job growth, and gives the Fed scope to deliver another large interest rate increase later this month.

Nonfarm payrolls jumped by 372,000 jobs in June, well above economists' expectations. The unemployment rate held steady at 3.6%.

 

 

Wall Street flat in choppy trade as investors weigh jobs data with rates plan

 

 

Wall Street was flat on Friday afternoon, although that belied the swings each benchmark had experienced throughout the day as investors sought to comprehend what a robust jobs report would mean for the Federal Reserve's plans to hike interest rates.

The Labor Department's closely awaited data showed nonfarm payrolls rose by 372,000 jobs in June, higher than the estimated rise of 268,000 jobs, according to a Reuters poll of economists.

The report also showed the jobless rate remained near pre-pandemic lows at 3.6% and average hourly earnings rose 0.3%, after gaining 0.4% in May.

 

 

ANALYSIS

 

 

USD/CAD set to break above key resistance at 1.3080 – TDS 

 

 

“A disappointing jobs number does not do the CAD any favors, particularly against a much stronger payrolls report in the US. The data mix is supportive of a higher USD/CAD, but we are not convinced that it will break the 1.3080 resistance in the near-term. More dominoes need to fall before that happens. But make no mistake, it will.”

“We think USD/CAD is forming a higher base, and we believe that holding risk into US inflation and the Fed's Index of Common Inflation Expectations (CIE) next week is playing with fire (US CPI is expected to be as strong as the last report while the CIE likely rose).”

 

 

CHART

 

 

GBPUSD Near Term: Upside favored

 

 

Technical View: Long position above 1.188. Target 1.204. Conversely, break below 1.188, to open 1.1825.

Comments: The pair remains supported. Further advance favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar


Footnotes
https://www.cnbc.com/2022/07/08/gold-markets-inflation-recession-interest-rates-bond-yields.html
https://www.cnbc.com/2022/07/08/gold-markets-inflation-recession-interest-rates-bond-yields.html
https://www.cnbc.com/2022/07/08/oil-markets-supply-recession-inflation-economic-uncertainty.html
https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-07-08/
https://www.reuters.com/markets/europe/futures-slip-ahead-june-jobs-data-2022-07-08/
https://www.fxstreet.com/news/usd-cad-set-to-break-above-key-resistance-at-13080-tds-202207081413
 

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