Macro Roundup (Jan 11)

SHANGHAI, Jan 11 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar turned higher against a basket of major currencies on Friday after a dismal December U.S. payrolls raised expectations for further stimulus measures to prop up an economy battered by the coronavirus and its related government lockdown measures.

The Labor Department said nonfarm payrolls decreased by 140,000 in December, the first decline in eight months, well below expectations that called for a still-weak increase of 71,000 jobs. The unemployment rate was 6.7%. Economic data during the week leading up to Friday’s report indicated a stalling labor market.

The greenback had been climbing from a nearly three-year low on Thursday as a rise in U.S. yields helped fuel the unwinding of bearish bets on the currency, with traders taking profits against the euro in particular.

After a brief pullback after the release of the data, the greenback resumed its path higher, as expectations grew for additional stimulus measures to help buttress the economy until vaccine rollouts allow for the easing of lockdown measures.

On Wall Street, stock futures dipped in overnight trading Sunday as investors assessed the outlook for more Covid-19 relief stimulus.

Futures on the Dow Jones Industrial Average fell 70 points. S&P 500 futures traded 0.2% lower and Nasdaq 100 dipped 0.1%.

The stock market is coming off a solid week to start 2021 as investors looked past a violent siege of the Capitol and focused on the prospect for additional fiscal stimulus after a Democratic sweep of Congress. The S&P 500 climbed for four days straight to a record with a 1.8% gain last week. The Dow and the tech-heavy Nasdaq Composite gained 1.6% and 2.4% in the prior week, respectively, also reaching all-time highs.

“The advance is built on three main pillars: strong corporate earnings, massive stimulus, and vaccine optimism,” Adam Crisafulli of Vital Knowledge said in a note on Sunday. “Stimulus expectations are getting elevated – Biden’s plan may be worth several trillion dollars on paper, but what actually gets passed will probably be much smaller.”

Oil prices hit their highest level in nearly a year and were on track for a weekly gain on Friday, supported by Saudi Arabia’s pledge to cut output and strong gains in major equity markets.

Brent crude climbed 94 cents, or 1.8%, to $55.35 a barrel, and West Texas Intermediate crude futures (WTI) settled $1.41, or 2.8%, higher at $52.24 per barrel, also its highest since late February. Both benchmarks were on track for weekly gains of more than 6%.

“People are realizing the market is tighter than it has been in a while and that the commitment by Saudi Arabia to cut back production is going to keep the market balanced despite the concerns about shut-ins from COVID,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Saudi Arabia this week pledged extra, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns.

Gold slumped more than 4% on Friday and silver followed with a near 10% plunge as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields hammered the precious complex.

Spot gold fell as low as $1,828.36 and was last down 3.6% at $1,843.06 per ounce, en route to register its worst week since November. U.S. gold futures settled down 4.1% to $1,835.40.

“Gold is having a major fundamental shift for many investors and they’re starting to abandon their safe haven trade,” said Edward Moya, senior market analyst at OANDA.

“You’re probably going to see that the Treasury market sees some strong flows and that’s taking away some of the appeal from gold.”

On the data front, euro zone unemployment unexpectedly declined in November, according to Eurostat figures published Friday, falling to 8.3% from 8.4% in October.

China CPI annual rate and Eurozone Sentix Investor Confidence will be released today.