The ECB, Gold and U.S. dollar – This morning the European Central Bank (ECB) surprised global markets by slashing key interest rates to a new record low of 0.05% from 0.15%.
U.S. Non-Farm Payroll disappoints with only 88k of new job creation. It’s the lowest jobs number since June and the largest miss in nearly 2 years. Analysts were expecting an increase of 200k for the month of March after a February’s 268k results.
The technicals are in control of gold futures today as price hits a 5 week low on technical selling after the shiny metal crossed below the 21 and 30 day moving averages.
As we being the final session of the week the euro catches a bid against the U.S. dollar after euro zone leaders announced it will allow some of the troubled counties like France, Spain and Portugal to take additional time to lower their respective budget deficits easing some of the burden of austerity.
There’s a change a foot for the U.S. dollar and like other major trend shifts in the direction of the “greenback”, this is not expected to be a short term move, nor has this change taken place overnight. The impact for commodities and emerging markets could be dramatic.
Gold price moved higher during the Asian session as the “risk off” trade sentiment circled the globe as market participants took risk off during the U.S. equity session on concerns of Italy’s election. U.S. stocks fell to the worst level since November of last year.
The U.S. non-Farm Payroll report has traders cautious after this week’s unemployment initial claims disappointed markets cooling the currency markets prior to the release at 8:30.
Currency wars continue as the Bank of Japan continues to attempt to verbally lower the yen while the euro catches a bid higher as sentiment strengthens that the euro zone is indeed stabilizing sending the EUR/JPY to nearly a 3 year high, the pair has not been seen this high since May of 2010.
The euro is lower against the U.S. dollar for the second session in a row on uncertainty over the new Greek debt deal and growth concerns over the U.S. fiscal cliff.
The Spanish credit rating downgrade from BBB+ to BBB- yesterday evening from Standard and Poor’s rating agency did not stop the euro from moving higher against the U.S. dollar.