With U.S. markets closed for Good Friday, the awful nonfarm payrolls report that missed analysts' expectations by about half is finally taking effect this morning. Stock futures pointed lower this morning, while both crude oil and the precious metals were significantly higher in response. Gold jumped more than $15 to $1,220/oz, while silver moved back above $17/oz. Both platinum and palladium were recovering toward their levels at the beginning of the year. The dollar was slightly lower at 96.5 on the DXY. Much of the action on the global markets is being driven by the weak data in the U.S., while markets in the U.K will remain closed today following Sunday's Easter holiday.
Yesterday in the Markets
Markets were closed for Good Friday.
Factors Affecting Gold Today
Stocks will look to pare their overnight losses from Friday's ridiculous NFP miss, which came in at 126,000 new jobs as opposed to experts consensus predictions of 248,000. This has stoked concerns that the U.S. labor market, and the all-important energy and manufacturing sectors, will continue to be dragged down by the strong dollar. The yen did gain against the dollar on the NFP news, while shares in the region were mixed, with China's Shanghai and Hong Kong's Hang Seng indices both in the green, but the Nikkei 225 was slightly down.
Two factors were pushing crude prices higher this morning: 1) the framework for the Iran nuclear deal, which may open up the world's fourth-largest oil reserves as sanctions against Iran are eased in the near future; 2) Saudi Arabia decided to raise its oil prices for Asian customers for the second straight month. WTI crude sat 3% higher this morning at $50.50/bbl while Brent was also nearly 3% higher at $56.50/bbl. Meanwhile, President Obama is still attempting to fend off the negative blowback for not securing a better deal with the Iranians, and potentially ostracizing Israel as an ally of the U.S.
At any rate, the poor nonfarm payrolls data is placing even greater pressure on the Federal reserve to push back its impending increase to the federal funds rate, the basis for interest rates around the country. New York Fed President William Dudley offered that the rate hikes should be shallow in order to normalize policy gradually, and avoid setting off a shock to the financial markets. At this point, many don't expect any rate increases before September, if at all this calendar year.
The euro is up for the fourth straight day, moving above $1.10 again. The winning streak for the euro was extended by word that Greece has promised to make its next loan payment (of €450 million) to the IMF on time. This has helped the euro advance 2.5% over that four-day span, but it is still down over 5% so far in 2015. The Aussie dollar also pulled back, approaching parity with the New Zealand dollar (nicknamed the Kiwi), which is increasing the chances the Reserve Bank of Australia cuts its interest rates again at tomorrow's policy meeting.
Tomorrow will see important announcements by the central banks of Japan, India, and Australia, while composite PMI data will come from Germany, France, the U.K., and the EU as a whole. The JOLTS report will be released in the U.S.