US Economy Sputters; Looks Ahead Towards NFP

Daily Analysis - 03/08/2016

Chance of US Interest Rate Hike Continues to Fall


The US dollar has seen a consistent bearish downtrend following the preliminary second quarter GDP estimate released last Friday. According to CME’s Fed watch, financial markets are predicting that the chance of a rate hike as of June 2017 is only at 50%. However, the probability of a rate hike could change if the nonfarm payrolls report due on Friday shows a bullish result.

Energy Markets Waiting For Crude Oil Stockpile Report To Be Released

U.S. oil inventories dropped by 1.340 million barrels and gasoline inventories fell by 450,000 barrels according to data released by the American Petroleum Institute yesterday. This helped stabilize oil prices temporarily, but the focus today will turn to the Energy Information Administration release with forecasts anticipating that stockpiles fell by -1.363 million barrels for the week ended July 29.


Aussie Dollar Continues to Stengthen After Rate Cut

The Australian dollar has continued to trend higher after the Reserve Bank of Australia opted to cut interest rates to the lowest level in the history of the nation’s monetary policy. The Aussie dollar jumped to $0.7638 against the US dollar, rising to near its 3-week high. The Australian dollar might continue to climb on the heels of the retail sales report set to be released later in the session. Considering the importance of the retail sales component as an important indicator of consumer spending, any bullishness in the report will likely translate to additional strength in the Australian dollar.


Gold Hovering Below Landmark Level of $1,400

Gold continues to be a preferred asset during a time of global instability as it continues its trend higher amid the selloff in the US dollar. Since the beginning of the year, gold has skyrocketed by 28.50%, finishing the session at $1,374 per troy ounce. With global financial markets experiencing rising turbulence over the last few months and the UK deciding to leave the European Union, gold has a very good chance of crossing the critical psychological level of $1,400.00 per troy ounce by the end of the third quarter if uncertainty in financial markets endures over the medium-term.



UK Service PMI Falls Flat before 'Super Thursday'

The Services PMI in England is showing contraction for the first time since 2013 with A reading of 47.4 in July.  Last months contraction should come as a concern because this data is the first full month since the UK referendum.



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