Ahead Of Friday’s Jobs Data
IFC Markets | May 02, 2014 08:15AM ET
The U.S. Dollar Index has not changed on Thursday. The economic data in general were slightly positive in spite of increase in the number of unemployed people per week. The ISM Manufacturing Index rose in April more than expected and amounted to 54.9 points. However, the Fed Chairman, Janet Yellen said that low interest rates will stay for a long time. This slightly disappointed investors. Today at 14-30 CET, we expect the official U.S. labor market data to come out for April. The Nonfarm Payrolls index is the main one. The forecast is positive since there was already a good similar report from the ADP on Wednesday. The U.S. Dollar index is rising this morning.
Yesterday, there were the good industrial production (PMI) and the real estate market data coming out in England. The average price of an English home demonstrated the highest growth compared to June 2007 and amounted to 183,577 pounds, or $310 000. Due to this, the Pound (GBP/USD) rose and updated its 5-year maximum. Investors believe that the Bank of England will be the first to begin tightening the monetary policy, by raising the discount rate. It may occur in the fourth quarter or in the begining of next year, in accordance with the levels of interbank rates.
The Australian Dollar (AUD/USD) strengthened as investors reacted positively to the increase in the PPI for the first quarter. They believe that it will increase the profits of Australian companies and boost the economic growth. The RBA meeting is planned to be on May 6th.
The Copper prices fell as the Chinese manufacturing PMI raised yesterday less than expected. China is the largest copper consumer in the world after the United States that had the week GDP data released on Wednesday. Another factor of reduction in copper prices were talks between Rio Tinto and the Government of Mongolia on the possible start of its production at one of the world's largest minefields (Oyu Tolgoi) in September.
The ETFS Soybeans (SOYB.LONDON) price collapsed yesterday to the minimum of 19 months. The Commodity Weather Group released the weather forecast, saying that the dry and warm weather in the U.S. Midwest will stay the same through May 8. This can help to increase the crop this year. Prior to this, the Soyb price growth was supported by a low level of stocks in the U.S.. They are on the lowest level since 1964. Note that the improvement in the weather conditions yesterday also contributed to the decline in prices for other crops.
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The London Wheat price fell less than the others. According to the forecast of the Wheat Quality Council, its yields in Kansas will make 33.2 bushels per acre in 2014, due to bad weather in the early spring. This is the lowest level since 2001. The total crop may be the smallest since 1996 and reach 260.7 million bushels.
The US Coffee C price has been in a neutral trend for a few days. It has grown by 29% from the beginning. Meanwhile, Vietnam has recently sold a batch of coffee at a discount. Thus it competes with Indonesia. We do not exclude that it may cause a price correction. Vietnam increased the crop forecast for this year from 25 million 60 kg to 28 million. Indonesia lowered its forecast for the crop to 12.73 million bags to 11.67 million. Both countries hold 27% of world coffee production.
Silver (XAG/USD) renewed a yearly low yesterday, but then rose slightly. The Bloomberg agency released the price forecast for the third quarter of this year ($18.8 per ounce), which is close to the current prices. Note that now one may buy 67.21 ounces of Silver for one ounce of Gold. Whereas the average for the last 30 years is 64.8 ounces. Perhaps silver looks undervalued compared to Gold. In our opinion, the rise in prices can begin after the positive on industrial production data from China, the U.S. or the EU. Silver is widely used in the industry.
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