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13.01.2014 - Data on labor market significantly weakened the U.S. dollar

The last trading session of the week appeared to be pretty volatile. The reason for increased activity of traders was the data on the labor market in the United States. The market was shocked by weak growth in the number non-farm payrolls, which grew by only 74 thousands with expected performance of 196 thousand and the previous figure – 241 thousand. The rate of job growth was the weakest in three years. At the same time, the unemployment rate in December dropped 0.3% to 6.7%. The U.S. Commerce Department on Friday released a report on wholesale inventories, which rose by 0.5% while expert waited for 0.4% increase. The growth of inventories is a negative factor for the economy, because it shows the weakness in demand for goods.

The final figure of Eurozone GDP growth in the third quarter has met expectations of analysts and was 0.1%. The euro has strengthened on the background of weak labor market data in the U.S. So, was broken the resistance level of 1.3660. Further target in case of continuation of the upward movement is the resistance level at 1.3710. Correction is possible to 1.3620.

Output in UK manufacturing, as well as in industrial production as a whole has not changed in November, although it was expected that the figures will rise by 0.4%. The weakening of the U.S. dollar resulted in the continuation of the British pound growth inside the rising channel. After the price has fixed above the level of 1.6460 the next target has become the local maximum – 1.66. We expect that the price will continue to move inside the rising channel.

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Asian stock markets showed a mixed dynamics. The weakening of the U.S. dollar has led to breaking through the lower limit of the upward channel of the USD/JPY pair. The price has reached a support level 103.35. After a strong decline, we expect a correction during which the price can reach 103.90. In Japan today, is a day off so we should not expect a high activity of traders. Tomorrow the course of trading may be affected by the data on the balance of payments, which will be published today at 23:50 GMT.

Despite our expectations, the Australian dollar was able to break through the strong resistance level at 0.90. At the further growth the price can reach 0.9060, but most likely we will see a correction to 0.90 and afterwards to 0.8970.

Despite the decline of the dollar on the foreign exchange markets, the price of Light Sweet crude oil continues to remain in a narrow range 92.00 – 92.90. It should be noted that the low growth rate of new jobs negatively affected the prospects of growth in consumption of oil and oil products. Also we should stress that in the U.S. are growing gasoline and distillates inventories. We maintain our negative outlook for oil in the long term due to the fact that oil production is growing faster than its consumption. We do not exclude a correction to the level of 93.60 dollars per barrel.

Gold prices have strongly grown on Friday on the background of the drawdown of the dollar. The price had broken resistance level at 1242 and reached 1250. Further growth is limited to 1265. The nearest support level in case of correction is 1242. Bank of America Merrill Lynch lowered the forecast average prices for 2014 to 1150 U.S. dollars per troy ounce, citing on macroeconomic uncertainty and weak demand for physical gold and investment certificates of “gold funds.” Barclays expects the average price of gold this year to be near 1205.

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