Employment in the Private Sector Boosting Payroll Numbers and Pushing Down Unemployment
Although less exceptional than previous months, analysts are still expecting an excellent payroll figure based on the rising trend portrayed by yesterday’s ADP, which betold of 237,000 jobs added to the economy. Following May’s 280,000 job increase, expect June to show and additional 230,000, with some indications pointing towards 234,000. Goldman Sachs has revised estimates downwards, towards 220,000 – a figure they believe will be true until the end of the year. Overshadowing the estimates, yesterday’s Challenger Job Cuts report indicates increasing layoffs, primarily in the manufacturing sector. Still, unemployment is expected to drop to 5.4% in spite of a strong USD impinging upon export feasibility.
With the country entering its fourth day of capital controls, the world awaits the Greek referendum on Sunday, which will decide if the country agrees to creditor terms in return for resumed funding or not. At present, yeas have a slight lead, while news images show pensioners franticly attempting to withdraw cash from lifeless ATM machines. The European Central Bank has meanwhile refrained from anticipatory steps to arrest potential collateral damage, and ELA backing for banks is still facilitating accelerating outflows. Creditors meanwhile are unwilling to negotiate until learning the outcome of the referendum as the clock ticks down.
Oil stockpiles rose by an additional 2.386 million barrels in the prior week, based on Department of Energy figures released yesterday after a surprising report from API. With production at near-record highs, the news indicates a reversal from an 8-week inventory decline. WTI dropped to its lowest price since May, then rebounded back over its $57 handle; the price for Brent altered to a lesser extent. The spread is currently more than $5 a barrel – nearly double last week’s figure; and prices are testing the bottom of a multi-month range. As the oversupply in the crude market threatens recent gains, natural gas also dropped yesterday, ending a 2-week upward momentum before rebounding late in the day and trending upwards overnight.
XAGUSD Descending Triangle Trading Opportunity
Momentum higher in the dollar continues to sap demand for other haven assets such as precious metals with gold and silver prices approaching multi-month lows. Positive fundamental data and improving macroeconomic indicators continue to bolster the rate hike outlook as markets await today’s payroll data for further indications of improvement in the underlying economy. The inverse relationship between precious metals and the dollar remains strong as evidenced by recent price action. The descending triangle pattern forming in XAGUSD is tantamount to the point, with prices pressured lower by the continued upside in the US dollar. The consolidation currently underway between the near-term downtrend and support at 15.490 has a bearish bias with any move below support considered a downside breakout.
Wishing You a Successful Trading Day,
NetoTrade Analysts Team