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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 107185, member: 38730"] [b]Daily Market Outlook 5 August[/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] The dollar held steady on Friday with its near-term fortunes riding on whether U.S. jobs data will rekindle expectations for the Federal Reserve to raise interest rates this year. The British pound licked its wounds a day after the Bank of England not only cut interest rates but also restarted its bond purchase program to shore up the economy. With the BoE decision now out of the way, the market's focus is shifting to the U.S. jobs report due at 1230 GMT. A strong reading there could help the dollar by reviving expectations that the Federal Reserve could raise interest rates by year-end, a scenario that had been discarded in the days that followed the shocks from June's Brexit vote. Although surprisingly tepid U.S. second-quarter GDP growth figures published last Friday have dented the dollar, the greenback has recovered slowly. Economists polled by Reuters expect a non-farm payroll increase of 180,000. Average wage earnings, seen as a key factor in gauging the strength of any inflationary pressure, are expected to rise 0.2 percent. That hit for sterling came after the BoE cut interest rates to a record-low 0.25 percent, pledged 60 billion pounds ($78.71 billion) in government bond purchases and launched schemes to buy high-grade corporate bonds and ensure banks pass on the full rate cut to borrowers. Now that sterling has broken below trend line support in place during its recovery from a three-decade low of $1.2798 on July 6, the currency is at risk of testing that low again, some analysts said. In the week, the Aussie has gained 0.7 percent, showing resilience even after the Reserve Bank of Australia (RBA) cut interest rates to a record low 1.5 percent on Tuesday. The Australian dollar held firm despite a dovish quarterly economic assessment by the central bank on Friday that seemed to leave the door open to further cuts in interest rates. The RBA said core inflation was likely to remain below target all the way to 2018 providing scope for the economy to run even faster. Real wages in Japan rose the most in almost six years in June, data showed on Friday, but the gain was exaggerated by the effect of falling prices, highlighting the government's struggle to pull the economy out of deflation. Prime Minister Shinzo Abe has sought to lift the economy out of two decades of stagnation through a three-pronged mix of big government spending, ultra-loose monetary policy and structural reforms. While pay increases and higher spending are key for the success of Abenomics, wage gains inflated by low prices may not spur private consumption, which remains sluggish. Real wages, which are adjusted for inflation, jumped 1.8 percent in June from a year earlier, the highest level since September 2010. In the previous month, they rose 0.4 percent on-year, revised data from the labor ministry showed. U.S. employment likely increased at a healthy clip in July, with wages picking up, which should help to underpin consumer spending and boost the economy. The Labor Department's closely-watched employment report on Friday will probably show that nonfarm payrolls increased by 180,000 jobs last month, according to a Reuters survey of economists. While that would be a step down from June's 287,000 surge, July's expected gain would still be above the average monthly advance of 171,500 jobs over the first half of the year. June's robust hiring, which followed a mere 11,000 gain in May, was viewed as unsustainable given that the economic growth in the last three quarters averaged a 1.0 percent annualized rate. Should job growth meet expectations, it would reinforce the Federal Reserve's confidence in a labor market that officials view as at or near full employment, economists say. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth. Oil prices fell on Friday as a crude and refined product glut weighed on markets and investors eyed a possible stutter in China's imports, ending a two-day short-covering rally. Traders said oil markets came under renewed pressure from overproduction in crude and refined products that has left onshore storage tanks filled to the rims and triggered the chartering of tankers to store unsold fuel. On the demand side, BMI Research said China's imports were weakening from records set in 2015 and this year. Friday's slump ended a mid-week rally driven in large part by those holding short positions booking profits from a more than 20 percent fall in oil prices between June and early August, traders said. In oil market news, Yahoo's standalone messenger software, the main tool used by traders to communicate since the late 1990s, is due to shut down on Friday, leaving market participants with a fragmented choice of alternatives, including Eikon Messenger, ICE Instant Messaging, Symphony, Bloomberg Messenger, Twitter and WhatsApp. Also, in pricing and analytics, leading commodity price reporting agency S&P Global Platts has signed an agreement to acquire global energy market analysis firm PIRA Energy Group. [/QUOTE]
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