News & Analysis

NFP misses – Dow holds and gains; New tariffs advised by China; Bitcoin correction continues price breaks below 7k

Aug 6, 2018 | Market Updates

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Bank Holiday – Canada

U.S stocks found back from opening low’s on Friday to finish higher. Jobs data came in weaker than expected, 157,000 jobs added below the 190,000 forecast. Average earnings met 0.3% expectations and unemployment remained steady at 3.9%. US futures fell after the data was released. The Dow fought back to close 136 points higher helped by Apple climbing further into the trillion cap level. The Nasdaq gained 9.33 and the S&P500 added 13.13.

Trade – China announced new tariffs on Friday, ranging from 5% – 25% on close to 60 billion U.S. imports including agriculture goods. China advised these duties would be implemented if the U.S. proceeded with new tariffs on Chinese goods. U.S stocks looked past this news to finish in the green.

European stocks closed the week stronger, the FTSE added 83 and the DAX closed 69.43 points higher. Tech continued to strengthen and buyers were supported by solid corporate results. Royal Bank of Scotland rose 2.9% after reporting its latest results. The bank said it was on track to deliver its first dividend in 10 years.

BOE’s Carney warned of “uncomfortably high” risk of no deal between U.K. and Europe.

Oil settled lower on Friday weight by trade worries. USOUSD closed 25 cents lower after fighting back from 110 cent losses. Price closing at 67.95. Analysts said the outlook beyond the short-term was turning bearish as Russian and Saudi output increases.

Gold ended higher after U.S jobs data failed to meet expectations. “I think gold is close to bottoming out. Whether it’s $1,200, $1,210 or $1,190, it’s impossible to tell,” said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam, adding that speculators will probably want to test the $1,200 level. “Gold is getting cheap and positioning wise that should be a reason for bottoming out. The shorts are relatively big.” Price closed $5.70 higher at 1213. This morning buyers are testing Friday’s highs with a 3.92 rally.

The USD finished Friday mixed with falls to the AUD and slight gains to the EUR and GBP.  Pressure from a tightening labour market and Chinese Yuan took some demand out of the market. The Fed is expected to raise rates two more times this year. The USD ended lower to the CAD after the Canadian trade balance beat expectations.

The GBP was shaky after Bank of England Governor Mark Carney said there was an “uncomfortably high” risk of Britain leaving the European Union without a deal.

Bitcoin dropped over the weekend breaking back into the 6000 levels, this morning price is 118 higher and looks to be holding from 7000. Trend momentum on the short-term still remains in a correction phase.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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