The Forex Daily Digest – November 6, 2009
Gold futures rose, after the U.S. government reported the unemployment rate in October, topped the 10% mark for the first time in 26 years, pressuring stocks and lifting safe-haven demand for the USD against the JPY. The dollar fell against the JPY after the October Nonfarm Payrolls report was released. Analysts said the report was disappointing and boosted risk aversion trade.
The unemployment rate in the U.S. increased to 10.2 percent in October and employers cut more jobs than forecast, underscoring why Federal Reserve policy makers say interest rates will remain near zero. Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists. The jobless rate gained from 9.8 percent in September and exceeded 10 percent for the first time since 1983.
Gold rose to within 0.1 percent of a record in London as a weaker USD spurred demand for the metal as a hedge and as central bank purchases increased confidence in the outlook for demand. Bullion is heading for a ninth consecutive annual gain and approaching $1,100 an ounce for the first time as investors seek to protect their wealth from the threat of inflation and the debasement of the U.S. currency.
The CAD depreciated after a government report showed employers unexpectedly eliminated jobs in October, prompting investors to trim bets on higher-yielding assets. The currency fell for a second day as the unemployment rate rose to 8.6 percent from 8.4 percent in September while employers eliminated 43,200 jobs. Economists predicted employment would rise by 10,000 and the jobless rate would increase to 8.5 percent.
The AUD strengthened, poised for its biggest weekly advance in a month, as the central bank signaled it will add to two interest-rate increases over the past month because the economy’s expansion will accelerate. The NZD was little changed, also set for a weekly advance against the USD and the JPY.
The Group of 20 is expected to agree this weekend that it is too early to pull the plug on emergency support for the global economy and launch a new system of checks to help rebalance world growth and prevent a future economic crisis. British finance minister Alistair Darling is hosting the third meeting of G20 finance ministers and central bankers this year in St Andrews, Scotland, in order to finalize agreements made at the leaders' summit in Pittsburgh in September.
The G-20 agenda will involve measuring the effects of member nations’ economic policies and proposing changes for their leaders, who meet in June. China and other Asian nations have accumulated USDs from widening trade surpluses, buying U.S. Treasury debt and depressing global yields. Lower borrowing costs helped fuel the U.S. housing and credit booms that turned to bust in 2007.
The coming week appears to be extremely slow for U.S. economic reports. Watch for Initial Claims, Crude Inventories, the Treasury Budget, Import and Export Prices, Trade Balance figures and the preliminary Michigan Consumer Sentiment report.
Earnings scheduled for release next week include Wal-Mart, Disney, EchoStar Communications, HSBC Finance, Lions Gate Entertainment, Beazer Homes, Tyco International, Vodafone Group, Applied Materials, ING Groep, Macy’s, JC Penney, Anheuser-Busch InBev, Blockbuster, Nordstrom, and Vivendi.
Happy Trading,
James Dicks
The unemployment rate in the U.S. increased to 10.2 percent in October and employers cut more jobs than forecast, underscoring why Federal Reserve policy makers say interest rates will remain near zero. Payrolls fell by 190,000 workers last month, compared with a 175,000 drop anticipated by the median forecast of economists. The jobless rate gained from 9.8 percent in September and exceeded 10 percent for the first time since 1983.
Gold rose to within 0.1 percent of a record in London as a weaker USD spurred demand for the metal as a hedge and as central bank purchases increased confidence in the outlook for demand. Bullion is heading for a ninth consecutive annual gain and approaching $1,100 an ounce for the first time as investors seek to protect their wealth from the threat of inflation and the debasement of the U.S. currency.
The CAD depreciated after a government report showed employers unexpectedly eliminated jobs in October, prompting investors to trim bets on higher-yielding assets. The currency fell for a second day as the unemployment rate rose to 8.6 percent from 8.4 percent in September while employers eliminated 43,200 jobs. Economists predicted employment would rise by 10,000 and the jobless rate would increase to 8.5 percent.
The AUD strengthened, poised for its biggest weekly advance in a month, as the central bank signaled it will add to two interest-rate increases over the past month because the economy’s expansion will accelerate. The NZD was little changed, also set for a weekly advance against the USD and the JPY.
The Group of 20 is expected to agree this weekend that it is too early to pull the plug on emergency support for the global economy and launch a new system of checks to help rebalance world growth and prevent a future economic crisis. British finance minister Alistair Darling is hosting the third meeting of G20 finance ministers and central bankers this year in St Andrews, Scotland, in order to finalize agreements made at the leaders' summit in Pittsburgh in September.
The G-20 agenda will involve measuring the effects of member nations’ economic policies and proposing changes for their leaders, who meet in June. China and other Asian nations have accumulated USDs from widening trade surpluses, buying U.S. Treasury debt and depressing global yields. Lower borrowing costs helped fuel the U.S. housing and credit booms that turned to bust in 2007.
The coming week appears to be extremely slow for U.S. economic reports. Watch for Initial Claims, Crude Inventories, the Treasury Budget, Import and Export Prices, Trade Balance figures and the preliminary Michigan Consumer Sentiment report.
Earnings scheduled for release next week include Wal-Mart, Disney, EchoStar Communications, HSBC Finance, Lions Gate Entertainment, Beazer Homes, Tyco International, Vodafone Group, Applied Materials, ING Groep, Macy’s, JC Penney, Anheuser-Busch InBev, Blockbuster, Nordstrom, and Vivendi.
Happy Trading,
James Dicks
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