Nymex Crude Oil Futures Fall as US Recovery Remains Weak
Spread Betting 4 May 2012
The indices have managed to hold up rather well this week, despite economic data coming in consistently worse than expected.
Manufacturing, services and employment figures have all disappointed. This suggests that even if growth does exist, it is not likely to surprise to the upside.
The headlines however have been dominated by politics, with local and mayoral elections in the UK and national elections in France and Greece.
Across the water it looks like the race for President is closer than before, and it is certainly closer than the drubbing that the Coalition has suffered here.
Even though the French election had been looking like an easy win for Hollande, the financial spread betting markets have remained fairly composed. There hasn’t been any hint of nervousness since the initial worry that followed the first round of voting.
The bond markets currently seem to feel that even if Hollande gets in, he won’t be able to do all that he has proposed. Particularly since France has already lost its triple A credit rating.
We will have to wait and see what Sunday and the following weeks bring if France elects its first socialist President for 17 years.
The FTSE is in the red by some 20 points this morning, following weakness across the pond.
All eyes will be on today’s US Non Farm Payroll number, which has seen forecasts downgraded since Wednesday’s weak ADP figure.
Having said that, yesterday’s initial jobless claims bucked the recent trend, by coming in slightly better than expected.
The bulls will want to see a decent Non Farms number if the Dow Jones is to continue making fresh highs for the year. The big figure is due to come in at 170k.
It is a little surprising to see the markets holding up so well this week. However, with trading remaining in a very narrow range, it would be nice to see some excitement return to the markets.
The single currency enjoyed a short rally in the morning after the ECB President Mario Draghi said that European policy makers had not discussed a cut in interest rates. The move higher came despite the ECB President also admitting that the European economic outlook had deteriorated.
However, forex spread betting investors are remaining cautious because of the political uncertainty in France. The afternoon session ultimately saw the euro close nearly flat at $1.3152.
At the time of writing, the EUR/USD pair is at $1.3140, with near term support and resistance at $1.3120/00 and $1.3205/45 respectively.
Gold extended its losses for a third day in a row, ending $17.54 down at $1,635.98.
This came as the ECB President denied talks of a cut in interest rates. It sounded like the ECB are sticking to their mandate of caring less about growth and more about inflation.
Investors took notice of Draghi's comments and moved away from gold, even though today's US employment data might see them move back. At the time of writing the precious metal is just softer at $1,632.
The price of Nymex crude oil posted a steep fall of $2.68 yesterday, crossing below the short term moving averages and settling at $102.54, a level not seen since 23 April.
Discouraged by the seemingly anaemic US recovery, buyers did not want to take on the extra risk of a potentially bad number in the Non Farm Payrolls report.
Instead they closed their long positions, deciding to wait for further confirmations of growth. This morning Nymex is looking a little pressured, down $0.50 at $102.00.
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'Nymex Crude Oil Futures Fall as US Recovery Remains Weak' edited by SD, updated 04-May-12
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