Striving for stability
The U.S. dollar index closed at 972.30, down 37 points as the contraction in hourly wages outweighed to some extent the "positive" jobs report. Another factor was the weaker than expected reading on trade which reported that U.S. exports declined by 2.1% in January while imports were down 1.3%. We remain on the sidelines in currencies since we view the global economic picture as negative and exacerbated by the influx into Western countries of hundreds of thousands immigrants, putting a strain on an already weak situation.
April crude oil closed at $35.92 per barrel and was a factor in the U.S. equity market rally. For the week, crude was up 9.6% as talk of a potential output freeze by major producers changed the supply/demand estimates. The decline in the number of active U.S. oil drilling rigs for the 11th week in a row helped the bullish scenario. We feel the supply/demand situation and the current supply glut will overcome any threats of production cuts as the recessionary trend we see will outweigh any reduction in production. Stay out for now, but with a bearish view.
April gold closed at $1,263.70, down $7.00, but is up 19.8% since December, tied to the investment attraction as negative rates in Japan and Europe provided the impetus for precious metal gains. Traders feel the sharp rally in gold was exaggerated and we agree. Silver closed at $15.60, down 9.4c. We prefer the sidelines in precious metals.