Positive US Jobs Data Boosts Price of WTI Crude Oil Futures
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Spread Betting 6 August 2012
Global equity markets have been staging a rally that has caught many people by surprise and it's the US markets that are leading the way.
The FTSE has been attempting to get back above the resistance levels between 5700 and 5715 for some time. On Friday, the index managed this with ease.
The much better-than-expected Non-Farm Payroll figure actually saw markets react as they should do following some good economic numbers.
For months now the US economy has been wavering and we've highlighted the possibility that they might soon follow Europe into a recession. However, Friday's data confirms that they aren't going down without a fight.
The US labour market has managed to be quite resilient in the face of slowing economic activity and the housing market has also shown signs that it is on the mend.
As a result, the Dow Jones rallied sharply on Friday, gaining over 211 points to 13,096. This included a huge gap on the open, as the move effectively reversed the week's earlier downtrend, allowing the bulls to quite literally end on a high.
Investors were also cheered by the news that Angela Merkel's party in Germany approved the role of the ESM, the Eurozone's permanent bailout fund, albeit in its basic form.
This is good news for Mario Draghi's stimulus measures and is yet another step towards the ESM getting the sort of power such as a banking licence that so many people want to see.
But the legal wrangling between reluctant politicians and lawmakers continues and Germany remains steadfastly against the move to approve a banking licence.
This is what the markets are crying out for and pressure is mounting on Germany from all angles, including from France and Italy.
At some point the Germans may have to succumb as this is one of the first major steps to help drive borrowing costs lower and prevent a break up of the Eurozone.
Despite the excitement of Friday's big rally, and the addition of more Olympic medals to team GB's haul, the economic outlook doesn't look any better for the UK.
This week sees the BoE's inflation report which is expected to paint a gloomy picture of growth prospects and we could even see the economy flat line throughout 2012.
The rest of the week is very quiet in terms of economic data and there's nothing for us to get our teeth into today.
Volumes could remain thin today, as the train into work was emptier than in previous days and the track and field events continue.
The US Non-Farm Payrolls data showed a better-than-expected increase in the jobs number, 163,000 versus 101,000, which completely changed the overall sentiment in global markets.
In reaction, forex investors felt confident enough to take on some risk and pushed the euro 203 points higher against the dollar to $1.2386.
There was also speculation that the Germans might just give in to bonds buying by the ECB and this added support to the shared currency.
This morning however, a little bit of profit taking is creeping in, taking EUR/USD to $1.2350.
Commodity investors' appetite for risk was revived by the US employment report, which literally saved the week.
Some of that renewed interest was attracted by the precious metals, which pushed the gold spread betting market $12.3 higher to $1,601.2 on Friday.
This move was unusual compared to the past as a good figure would usually bring out the sellers of gold, but not this time.
The bigger picture still looks to be a sideways move for the precious metal, swinging around the $1,600.00 mark, and today we sit at $1,604.
Mirroring other world markets, the energy sector received a big boost of confidence once the US announced a bigger increase in its jobs number.
As a result, the price of WTI crude jumped nearly 5%, rising $4.13 to $91.39, as demand for oil remained strong, with more motorists expected to be on the roads.
A weaker dollar, with participants exiting the safe haven currency, added to the rise in black gold.
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'Positive US Jobs Data Boosts Price of WTI Crude Oil Futures' edited by SD, updated 06-Aug-12
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