| Forex The US dollar fell against most foreign currencies on Friday after a surprisingly strong non-farm payroll report eased worries about the outlook for the economy and boosted appetite for riskier assets. The safe-haven yen and Swiss franc weakened broadly, while higher-yielding currencies such as the Australian dollar gained as expectations grew the US labour market may not be as bad as many had feared. US employment fell for a third straight month in August, but the drop was far less than expected and private hiring was a positive surprise, relieving concerns about a stalling economic recovery. Nonfarm payrolls fell 54,000 as jobs were lost in the government sector, but the private sector, considered a better gauge of labour market health, added 67,000 jobs, according to the US Labour Department on Friday. Economists had forecast a loss of about 100,000 jobs, along with a rise of about 41,000 in private sector payrolls. The data did little to take the political pressure off President Barack Obama over the state of the economy though, or improve the Democratic Party's chances in November's mid-term congressional elections. Obama said his administration would announce new measures this week to help the economy. President Obama welcomed Friday's labour market report as "positive news", but said more needed to be done to help the economy and he promised an outline of new measures next week. Obama's plans could include extending middle class tax cuts, delivering more tax cuts to businesses to encourage hiring, investing in clean energy, and spending more on infrastructure. While the jobs data damped down concerns the recovery could stall, a second report on Friday showed growth in the dominant services sector hit a seven-month low in August, underlining the sluggish nature of the economic recovery. While the unemployment rate edged up to 9.6 percent from 9.5 percent, in line with expectations, it may have been because discouraged workers came back into the labour force to hunt for jobs and so were re-classified as unemployed. The data also suggested corporate America may be beginning to take on workers again after an initial burst of hiring and production last year to restock shelves left bare during the deepest recession in generations. Concerns about a possible "double-dip" recession had already diminished somewhat last week after data showed strength in the US manufacturing sector and an increase in consumer spending, but the sluggish pace of growth has kept investors on edge. |
| Indices Stocks jumped and commodities rose on Friday after data showing fewer US job losses than expected reinforced other reports this week to ease fears the American economy is on the cusp of a new recession. The US dollar fell against most foreign currencies and government debt prices slid as risk aversion ebbed on optimism the US economy may not be as anaemic as many had feared. For the month of August, both the Dow and the S&P 500 lost more than 4 percent. The Nasdaq fell more than 6 percent. The Labour Department said non-farm payrolls fell 54,000 in August. Private employment, considered a better gauge of labour market health than government hiring, added 67,000 jobs after an upwardly revised 107,000 gain in July. Recent poor economic data had strongly suggested for many in the market that a double-dip recession might be ahead. Risky assets later pared gains after a report showed the US non-manufacturing sector grew below expectations in August, but services still expanded for an eighth straight month. Wall Street closed more than 1 percent higher, with the benchmark Standard & Poor's 500 Index rising 3.8 percent for the week. While investors' appetite for risk rose on the payrolls report, data on national services by the Institute for Supply Management was a reminder of the economy's mixed outlook. Minutes from the US Federal Reserve's latest policy meeting, in which policymakers saw increasing risks to economic growth, also contributed to the cautious mood last week. The August 10 meeting was held against a darkening economic backdrop, and the Fed, in a significant policy shift, decided to reinvest maturing mortgage-related securities in government debt so its support for the stumbling recovery did not fade. The minutes showed this shift would be a precursor to a return to outright asset purchases only if downbeat signs on the economy continued to mount. US stocks were supported somewhat early last week by data showing a modest rise in the confidence of US consumers in August, coupled with a larger-than-expected rise in US home prices in June. The Conference Board, an industry group, said on Tuesday its index of US consumer attitudes, seen as a gauge of consumer spending, rose to 53.5 in August from an upwardly revised 51.0 in July. Consumer spending typically accounts for about two-thirds of US economic activity and is considered critical to the recovery. |
| Crude Oil Oil prices eased on Friday as weak US services sector data revived concerns about slowing economic growth, while a weakened Hurricane Earl posed less of a threat to refineries near its path. A report that the United States lost fewer jobs than feared in August boosted oil early, but a later report showing tepid growth in the US service sector sent prices lower. Oil bounced to finish well above its session low as traders took defensive positions ahead of the long holiday weekend. Oil prices ended the week lower for the third time in four weeks. Crude prices began a slump toward session lows after an Institute for Supply Management report showed the US non-manufacturing sector grew an eighth straight month in August, but at a slower pace than July and at a rate below expectations. The weak ISM data, eased storm concerns and bearish fundamentals were seen helping the oil market shrug off the weak dollar. A weaker greenback usually is supportive to dollar-denominated oil, making it less expensive to consumers using other currencies and lowering the value of the currency being paid to producers. Friday's US data arrived ahead of Monday's US Labour Day holiday which is traditionally considered the end of summer driving-demand season. US crude oil stocks rose more than expected last week and oil product inventories fell as refiners processed less crude. US crude stocks rose 3.43 million barrels to 361.7 million barrels in the week to August 27 as refineries cut their utilisation rates, according to a weekly report from the Energy Information Administration. Analysts polled had expected a 1.1 million-barrel rise in crude stocks. Distillate stocks fell 739,000 barrels to 175.2 million barrels, against analyst expectations for a 1.2 million-barrel rise. Stocks of gasoline fell 212,000 million barrels to 225.4 million barrels, near analyst expectations for a 200,000-barrel draw. Natural Gas - US natural gas futures ended sharply higher on Friday, as concerns about increasing storm activity prompted shorts to cover ahead of the long holiday weekend despite milder US weather forecasts for this week that should slow demand. While increasing tropical activity last week may have shorts nervous, particularly ahead of the holiday weekend, traders said moderating temperatures this month should keep most buyers relaxed. A US Energy Information Administration report showed total domestic gas inventories climbed last week by 54 billion cubic feet to 3.106 trillion cubic feet, a level not normally reached until mid-September. Most traders said the weekly build was neutral, noting it was close to the estimate of 53 bcf. Some agreed it was supportive, well below the year-ago gain of 64 bcf and the five-year average increase of 62 bcf. The EIA report showed the storage deficit to a year ago grew by 10 bcf to 208 bcf, or 6 percent, while the surplus to the five-year average fell eight bcf to 169 bcf, still a 6 percent cushion to help rebuild stocks for winter. Early injection estimates for this week's EIA report range from 45 bcf to 64 bcf, versus a 68-bcf build for the same week last year and a five-year average gain of 61 bcf. Despite the improved storage picture, builds have fallen short of the five-year average for 11 straight weeks as record summer heat slowed injections, most traders remain bearish. Milder September weather lies ahead, storage is comfortable and production at its highest in nearly 40 years. |
| DJI closed higher on Friday as it extends last week's rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signalling that additional strength is possible near-term. If the Dow extends last week's rally, the reaction high crossing is the next upside target. SPI gapped up and closed higher on Friday as it extended last week's rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signalling that additional gains are possible near-term. If it extends last week's rally, August's high crossing is the next upside target. NDI closed higher on Friday and the high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signalling that additional gains are possible near-term. If it extends last week's rally, August's high crossing is the next upside target. |
| EUR/USD closed higher on Friday and above the 20-day moving average crossing confirming that a short-term low has been posted. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signalling that a short-term low is in or is near. If it extends last week's rally, the reaction high crossing is the next upside target. Closes below the reaction low crossing would renew the decline off August's high. USD/JPY closed higher on Friday but the low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are neutral to bearish signalling that sideways to lower prices are possible near-term. Closes above Monday's low crossing are needed to confirm that a short-term low has been posted. GBP/USD closed higher due to short covering on Friday and the high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning neutral to bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing would temper the near-term bearish outlook. If it extends last month's decline, the reaction low crossing is the next downside target. USD/CHF closed higher on Friday as it consolidates some of this summer's decline. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are overbought and are turning bullish signalling that at the very least a correction is possible. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. If it extends this summer's decline, the 2009 low crossing is the next downside target. |
| Gold closed higher on Thursday and tested the 87% retracement level of the June-July decline crossing. Stochastics and the RSI are overbought, diverging but are neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off July's low, June's high crossing is the next upside target. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted. Silver closed higher on Thursday as it extends the rally off July's low. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, May's high crossing is the next upside target. |
| Crude Oil closed higher on Thursday and the high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If it renews the decline off August's high, May's low crossing is the next downside target. Natural Gas closed lower on Thursday as it consolidates the trading range of the past five days. The mid-range close sets the stage for a steady opening on Friday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends this year's decline, weekly support crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. |
| DJI losed higher on Thursday and above the 20-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI have turned bullish signalling that additional strength is possible near-term. SPI closed higher on Thursday as it extended yesterday's breakout above the 20-day moving average. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signalling that additional gains are possible near-term. NDI closed higher on Thursday and above the 20-day moving average crossing confirming that a short-term low has been posted. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are bullish signalling that additional gains are possible near-term. |