Last Friday’s US non-farm payrolls number beat Wall Street estimates, bolstering expectations of a rate rise from the Federal Reserve on Wednesday. 

The jobs number increased by 235k last month, beating the forecast of 190k and above the previous month’s reading of 227k. This signalled that the US economy is hitting full employment and that inflation is nearing its target, which might lead to accelerated rate normalisation this year.
 
These are well expected by the market and have almost been fully priced in. Consequently, the equity markets responded calmly. The US treasury yield hit 2.57% after the jobs report, which is its highest level since December.

The dollar index, however, slumped 0.7% overnight to the 101.5 area as the euro surged nearly 1% against the greenback, after Draghi’s comments on deflation and tapering the quantitative easing soon. 

The gold price rebounded on Friday after a short dive below the $1,200 level, once again proving that $1,200 remains a key psychological support level. The Fibonacci retracement suggests that the next support level is around the $ 1,193 area. 

The oil price slumped for a fifth day to around $48.0 per barrel this morning as the recent US oil rig count numbers showed recovery in US crude output. The Baker Hughes rig count added eight oil rigs last week, bringing the total rigs number to 617, versus 386 rigs a year ago. 

The rigs count has climbed for ten consecutive months since the oil price bottomed early last year, showing the US energy companies were taking advantage of a recovery of crude price to boost production. As more oil rigs resume drilling in North America, the glut concerns will again cloud the outlook of the supply-demand balance. 

Gold - Cash

 

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