Daily market briefing
This is the Daily Market Briefing, an exclusive Opteck look at what's going on in the world's financial markets today with our Chief Analyst Rick Majors.
US ISM Report Due Out Today
The figures for the Institute of Supply Management’s monthly report are expected to be released today Monday 3 March 2014. The report will cover the manufacturing numbers for the previous month of February 2014. At this time, many experts have expressed the opinion that there could be a slight increase in the rate of growth for this metric, keeping the movement of the ISM in the positive direction.
Analysts remind readers that the ISM report is a significant economic indicator in that it helps to provide an insight into the level of American productivity. Moreover, along with reports like the Non-Farm Payrolls and the CPI reports, it helps experts map trends in the economy.
Despite fears that the US economy may be stumbling in its recovery efforts, the outlook on jobs appears to be positive. While the figures for January 2014 were lower than those seen in November 2013, they were an improvement from the December 2013 numbers. Currently, experts have stated that they believe that the upcoming employment numbers which are due to come out later this week point to growth in the number of jobs added to the workforce.
As more people in the economy are employed, it increases their purchasing power, thus improving demand levels. Therefore, should manufacturers feel that there is a larger market for their goods, then they will produce more, thus raising the ISM numbers.
Traders are advised to watch for potential increases in the value of the USD in trading over the week with the release of the ISM and employment reports.
Aussie Rate Decision to be Issued Tomorrow
Australia is due to release their rate decision for the coming month tomorrow Tuesday 4 March 2014. At this time, many experts believe that the Reserve Bank will maintain their current rates for interest on lending in an effort to provide a more stable economic environment.
Readers are reminded that these rates relate to the interest on borrowing costs that can affect all levels of the market, including loans and mortgages. As such, any shifts to these rates can have a significant influence on the nation’s economy. In addition, this rate is often used as a key tool by the central monetary authorities to control inflation, as well as to expand and contract growth.
Analysts note that Reserve Bank Governor Glenn Stevens made statements following the release of last month’s rate, indicating observers that the central bank intended to maintain their current rate for the coming months. Stevens pointed to rising housing prices and other factors that could influence the economy as cause for seeking measures that could promote stability.
It is unlikely that traders will witness any significant changes to the value of the Aussie following the issuing of this report.
Hedge Funds Push Bets on Gold
It was reported on 3 March 2014 that hedge funds had raised their bullish positions on gold to a 14 month high based on bets that the American economy will face mounting difficulty in the near term. Some managers at the hedge funds have predicted that economic challenges will drive down the value of some of the major currencies including the US dollar, thus making gold more attractive as a haven asset.
Readers are reminded that gold is considered as a haven asset that investors will often turn to in times of devaluation in the stronger currencies. As the recession came into effect in 2008, many traders turned to gold as the dollar fell. However, as the Fed has assessed that the American economy is strong enough to withstand a reduction in their quantitative easing measures, the dollar has improved, drawing many investors back to the US currency.
Analysts note that gold trading over the past year has been exceedingly volatile. In 2013, gold suffered its worst year since 1981. That said, there are growing fears that there will be a stunting of growth in the US economy that could lead to a devaluation of the dollar. These concerns fly in the face of the improving job numbers and other indicators that imply that the economy could be improving.
Traders are advised to watch for potential shifts to the value of gold in trading as the hedge funds may push the direction of trading, thus influencing prices in the market.