According to reports published on 7 February 2014, the US job market succeeded in lowering the Unemployment Rate despite creating only a moderate level of new hires in the workforce. While many analysts had hoped for the addition of jobs closer to the figures of those presented for the month of November 2013 which surpassed 200k, the actual number came in at 113k. That said, this still marked an accomplishment, beating out the numbers for December 2013 which came in at on 75k.
Analysts note that while the number of jobs created remains limited, they do mark a significant achievement. First, despite the manufacturing slowdown that has been reported here in these reports, the economy appears to still be able to support the addition of new members to the workforce. As has been discussed in the past, due to the cyclical nature of the market, lower production generally correlates to the expectation of lower demand, which in turn is often related directly to the employment situation, since consumers are more likely to be active spenders if they feel confident in their employment situation. Therefore, it is impressive that job growth was possible under these circumstances.
It should be noted as well that there is increased questioning over whether the American economy is fully prepared for the additional tapering from the Federal Reserve on their stimulus spending. The Fed recently cut off an extra $10 billion from their quantitative easing measures, totalling $20 billion in reduction of spending over the past two months, leaving the stimulus package currently standing at $65 billion. Economists and investors are observing closely how the economy is able to grow and respond with these changes in the monetary policy.
Overall, the success of the job market to make the second reduction of the unemployment rate in two months is impressive as well as encouraging. Continued reports such as these may help to spur increased growth for the US economy, and hopefully for the dollar as well. As such, traders are advised to watch for advances by the USD in the coming days as the market reacts to these reports.
WTI Trading is Up Over Speculation of Increased Demand
It was reported today 10 February 2014 that the price of oil had risen in trading at the West Texas Intermediate energy market. Analysts point to two major factors in the rise in prices for the important fuel in the worlds largest energy consumer market. The first relates to the recent reports from Friday 7 February 2014 detailing the drop in the unemployment rate. Secondly, many experts have pointed to the spell of cold weather that has struck many parts of the US. Both of these factors lead to higher demand for energy, thereby helping to boost prices.
In regards to the improved job numbers, analysts note that as more hires are made in the workforce, increased productivity can be predicted, thus leading to more demand for fuel. This added demand can account for all sectors from that of manufacturing to workers needing fuel to travel to their jobs. As for the weather concerns, the cold has increased the demand for heating fuel for warmth. This demand is likely to stay high as the winter continues.
Possibly counterbalancing the rising pricing are reports coming out of Libya pointing to improved stability and increased production. With former protesters allowing pumping and exports to proceed without complications, the major North African oil producer has increased their daily production to nearly 600k barrels per day. Should they increase their output as is expected, it should help to bring down prices.
Traders are advised to watch for further fluctuations as new developments are announced regarding the demand for oil.
Chinese Gold Consumption Fights Back Against Slump
Demand for the precious metal appears to be on the rise in China, helping to keep prices from falling as Western markets have posted bearish positions. According to the reports from within the industry, usage of bullion and jewelry has risen considerably in China, which has proved to be a significant producer of gold as well as a consumer. Readers are reminded that gold prices fell during 2013, suffering their biggest losses in over 30 years.
Analysts note that demand for gold has risen constantly over the past year in Asia, with many experts suggesting that China has surpassed India in their level of consumption. As noted above, the demand for gold has dropped off significantly in the West. This is closely tied to the resurgence of major currencies such as the US dollar. Analysts have noted in the past that many investors will often turn to gold as a haven asset in times of trouble for the dollar. However the economic improvements over the past year have increased confidence among investors in the dollar, driving down demand for the precious metal as an asset.
Traders should watch for additional fluctuations in the price of gold in the coming days. That said, it is unlikely that it will drop below its benchmark trading value so long as Asian demand remains high.