MARKETS: Dollar holds its ground ahead of NFP

 
With the disappointing ADP data showing that US private employers added 158,000 jobs in June vs the 188,000 higher estimates, markets will be closely observing whether the pending NFP headline figure follows a similar pattern. June’s jobs report is a big deal and has the potential to impact rate-hike expectations this year, especially when considering how policy makers remain split on the outlook for inflation.
Much attention will be directed towards average hourly wages, as a decline in wage growth may raise concerns over inflation picking up, consequently weighing on the prospect of higher rates this year.
From a technical standpoint, although the Dollar is flexing against other major currencies, this could be deflated if June’s jobs report disappoints.

Sterling tumbles after industrial production falls

Sterling was vulnerable to heavy losses on Friday after industrial output data unexpectedly contracted in May, consequently fuelling the Brexit fears. With the string of economic data from the UK this week proving nothing to celebrate about, investors may be forced to re-evaluate the possibility of a UK rate hike this year.
With uncertainty still the name of the game when dealing with Sterling and Brexit woes weighing on sentiment, Sterling may be in store for further punishment.
GBPUSD is under increasing pressure on the daily charts. A break below 1.2850 could encourage a further decline towards 1.2750.

WTI Crude under pressure again

WTI Crude dipped below $45 on Friday after reports of a rise in US production overshadowed data that showed US Crude oil and gasoline inventories declined sharply last week. Earlier reports of Russia being opposed to any further supply cuts and OPEC’s output in June rising to its highest levels so far this year have also complimented oil’s downside.
With the unshakeable oversupply dynamics weighing heavily on investor sentiment and the increasingly clear fact that OPEC may be losing its grip over the industry, oversupply woes may remain a dominant theme.
From a technical standpoint, WTI Crude is coming under increasing pressure on the daily charts. Weakness below $44.50 could encourage a further decline towards $42.

Commodity spotlight – Gold

Gold prices depreciated early on Friday, as investors adopted a cautious approach ahead of the heavily anticipated NFP report later in the day. A slightly stronger US Dollar complimented Gold’s decline, with the metal edging towards $1,220 at the time of writing. It is becoming quite clear that the rising prospect of tighter global monetary policies has punished the zero-yielding metal with the short-term outlook tilted to the downside. Although the heightening geopolitical tensions surrounding North Korea, Brexit developments and on-going political risk in Washington may stimulate the flight to safety and offer some support down the line, Gold currently remains pressured.
From a technical standpoint, weakness below $1,220 may open a path towards $1,214.

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