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posted on 04 August 2017

Investing.com Weekly Wrap-Up 04 August 2017

Written by , Investing.com

Dow notches 8th-straight close on better-than-expected jobs report

The Dow closed at a record high for the eighth-straight session on Friday, buoyed by better-than-expected jobs data, fuelling risk appetite among investors.

The Dow Jones Industrial Average closed higher at 22,0192. The S&P 500 traded 0.19% higher while the Nasdaq Composite traded at 6351.56, up 0.18%.


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The U.S. economy added 209,000 jobs in July, ahead of forecasts of 183,000 new jobs while the unemployment rate was unchanged at a 16-year low of 4.3%, the Labor Department said on Friday.

The closely watched wage number was unchanged from previous months, with average hourly earnings up 2.5%. The average work week also was unchanged at 34.5 hours.

Wage growth is being closely monitored by the Federal Reserve for evidence of continuing strength in the labor market and upward pressure on inflation.

The upbeat jobs report, renewed expectations the Federal Reserve would keep to its plan to hike rates later this year. Sharon Stark, managing director of fixed income strategies at Incapital, referring to the jobs report said :

"This just gives them [the Fed] more ammunition for another rate hike."

The positive end to the week for U.S. stocks comes amid growing political uncertainty in Washington, after the special counsel overseeing the Russia investigation, impaneled a grand jury to investigate Russia interference in the 2016 elections, The Wall Street Journal reported Thursday.

See also:

Read more news from Reuters at Investing.com: Dow chalks up eighth record close in a row.

Forex

The dollar surged against a basket of global currencies on Friday, buoyed by data showing the U.S. economy created more jobs than expected while an update from the Trump administration on tax-reform lifted sentiment.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.86% to 93.50.

The dollar was on track to record its biggest one-day gain of the year so far, after a strong U.S nonfarm payrolls report eased concerns about a possible slowdown in the economy.

The U.S. economy created 209,000 jobs in July, handily beating the consensus estimate for the creation of 183,000 jobs.

As was widely expected the jobless rate remained unchanged at 4.3% while average hourly earnings met expectations, rising 0.3% from the prior month.

The increase in wages is being closely monitored by the Federal Reserve for evidence of continuing strength in the labor market and upward pressure on inflation.

Also adding to positive sentiment on the greenback, were comments from National Economic Council director Gary Cohn that the U.S. administration is working on a tax plan that would bring corporate profits back to United States. Cohn said:

"We're working toward real tax reform as well as major tax reduction in the United States."

The rise in the dollar weighed heavily on sterling and euro, as both currencies gave back recent gains against the greenback.

GBP/USD fell by 0.76% to $1.3039, a day after the Bank of England left interest rates unchanged.

EUR/USD lost 0.97% to $1.1754 while EUR/GBP fell to 0.9017, down 0.19%.

USD/CAD rose 0.53% to C$1.2647 while USD/JPY jumped 0.70% to Y110.80.

Commitments of Traders

Bullishness surged for oil, gold, silver, and the Canadian dollar.

Note: This data is for the week ending on Friday 01 August so the current week of trading is not reflected.

cot.2017.aug.01

Gold

Gold prices slumped in the wake of a surge in the dollar, after a stronger-than-expected nonfarm payrolls report eased concerns over a possible slowdown in the U.S. economy.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell $11.25, or 0.89%, to $1,256.62. a troy ounce.

Gold remained on track to snap a three-week winning streak amid renewed expectations the Federal Reserve will keep to its plan to raise rates at least once more this year, after U.S nonfarm payrolls report topped expectations, pointing to continued strength in the labor market.

The U.S. economy created 209,000 jobs in July, handily beating the consensus estimate for the creation of 183,000 jobs.

As was widely expected the jobless rate remained unchanged at 4.3% while average hourly earnings met expectations, rising 0.3% from the prior month.

The increase in wages is being closely monitored by the Federal Reserve for evidence of continuing strength in the labor market and upward pressure on inflation.

Gold prices had traded within a narrow range for most of the week, struggling to capitalize on weakness in the dollar, as market participants awaited further insight into the strength of the labor market. Michael Arone, Chief Investment Strategist at State Street Global Advisors said of Yellen and fellow labor economist Fed Vice Chair Stanley Fischer, said:

"They're stumped. I think they will continue on a path of monetary tightening because they will expect wages will accelerate."

In other metals trading, silver futures fell 2.12% to $16.277 while platinum futures rose by 0.46% to $969.

Copper traded at $2.885, up 0.0.24%, while natural gas, fell by 0.57% to $2.784.

Oil

Crude futures settled higher on Friday, capping off a volatile week which saw crude prices rise above $50 a barrel before pairing gains amid renewed concerns over Opec’s compliance with the deal to curb production.

On the New York Mercantile Exchange crude futures for September delivery rose 55 cents to settle at $49.58 a barrel, while on London's Intercontinental Exchange, Brent added $0.36 to trade at $52.35 a barrel.

Crude oil prices settled lower for the week amid renewed concerns over Opec’s compliance with the deal to curb production, after a survey, earlier this week, showed Opec supplies rose to their highest level of the year so far. That despite the current pact to reduce output by 1.2m barrels per day (bdp).

Opec output hit a 2017 high of 33 million bpd in July, up 90,000 bpd from the previous month, a Reuters survey showed earlier this week, despite the group’s pledge to curb production.

In May, Opec and non-Opec members agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.8 million bpd agreed in November last year.

Concerns over growing Opec production come ahead of a highly anticipating meeting between Opec members on Aug 7-8, as the group seeks to reaffirm its committee to increase compliance with the deal to curb production.

Market participants, however, downplayed the importance of the meeting next week, suggesting oil prices may struggle to sustained upward momentum. Tariq Zahir, managing member at commodity-trading adviser Tyche Capital Advisors said Thursday:

“I think we [oil prices] are going to be relatively range-bound unless we see some kind of weather or political event."

Meanwhile in the U.S. investors cheered bullish data showing the weekly count of oil rigs operating in the United States ticked down by one rig to a total of 765, oilfield services firm Baker Hughes reported Friday.

The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.

Natural Gas (Thursday Report)

U.S. natural gas futures were lower on Thursday, reversing earlier gains after data showed that domestic supplies in storage rose broadly in line with market expectations last week.

U.S. natural gas for September delivery was at $2.804 per million British thermal units by 10:40AM ET (1440GMT), down 0.7 cents, or around 0.3%. Futures were at around $2.841 prior to the release of the supply data.

Prices ended marginally lower on Wednesday amid bearish weather forecasts that should limit demand for the fuel.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on summer cooling demand.

Nearly 50% of all U.S. households use gas for cooling.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 20 billion cubic feet in the week ended July 28, just below forecasts for a build of 21 billion.

That compared with a gain of 17 billion cubic feet in the preceding week, a withdrawal of 6 billion a year earlier and a five-year average rise of 44 billion cubic feet.

Total natural gas in storage currently stands at 3.010 trillion cubic feet, according to the U.S. Energy Information Administration, 8.5% lower than levels at this time a year ago but 2.9% above the five-year average for this time of year.

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