News

Aussie Slides to an 11-Year Low on Soft Jobs Data

AUD

The Australian dollar plunged against peers following the January jobs data. The unemployment rate rose to 5.3% from 5.1% previously, as the participation rate ticked higher to 66.1% from a prior reading of 66.0%, while employment change came in at 13.5 thousand, slightly above the assumptions. The soft economic data would increase the prospects of further monetary policy easing by the Reserve Bank of Australia. The minutes of the last monetary policy meeting revealed that the board discussed and considered further easing. The AUDUSD reacted negatively to the news tumbling to $0.6630, and the EURAUD edged higher to $1.6285.

USD

The dollar index, which measures the greenback against a basket of major currencies, extended upside rally to 99.62, the highest since May 2017.  The dollar earned support from the upbeat economic data. The building permits and housing starts rose to the pre-financial crisis levels, and the producer price index surged to 2.1%. On the other hand, the Federal Reserve published the minutes of the last monetary policy meeting declaring the current policy remains appropriate for a time. The CME Fed Watch tool is showing an elevated probability of an interest rate cut in the July meeting by 25 basis points. The EURUSD fell to 1.0777, the lowest since April 2017, and the USDJPY soared to 111.85 as the BoJ continued to expand its balance sheet.

GBP

The British pound drifted lower against rivals despite better-than-expected economic data. Market participants are weighing the pick-up in economic activity and the pessimism over the talks between the United Kingdom and the European Union on trade. The GBPUSD dropped to $1.2883, and the EURGBP inched higher to 0.8376.

Metals

Gold prices rallied to their highest level since 2013 amid increased chances of further easing by the Federal Reserve in the second half of 2020. The CME Fed Watch tool is showing a probability of a cut in the July meeting. Meanwhile, market participants are estimating the effects of the novel Coronavirus on economic activity, and they are reducing their exposure by jumping into safe-haven. The price of a gold ounce rose to $1613, the price of a silver ounce advanced to $18.46, while palladium futures faltered at a record high of $2755 and declined to $2571.

Oil

Oil prices extended rally despite a buildup in oil stocks. The American Petroleum Institute reported an increase of 4.2 million barrels in US oil inventories last week. The official figures will be out from the US Energy Information Administration later today. Oil benchmarks are finding support from the prospects of further output reduction by OPEC+ in their meeting early March. The West Texas Intermediate crude futures rose to $53.83, and Brent futures climbed to a three-week high of $59.39.

Major Economic Events

GMT Country Event Expectation Previous

9:30

UK

 Retail Sales (MoM) (Jan)

0.7%

-0.6%

10:30

EU

 ECB's De Guindos Speaks 

-

-

11:00

UK

 CBI Industrial Trends Orders (Feb)

-19

-22

12:30

EU

 ECB Publishes Account of Monetary Policy Meeting 

-

-

13:30

US

 Philadelphia Fed Manufacturing Index (Feb)

12.0

17.0

13:30

US

 Initial Jobless Claims

210

205

16:00

US

 Crude Oil Inventories

2.494

7.459


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