Fearing a recession

May 9, 2016 10:51 AM

Currencies

The weak Labor Department number of only 160,000 jobs created against the expectation of a 200,000 number prompted selling in the dollar. Tepid economic growth could prolong low rates which is detrimental to dollar investment. The U.S. dollar index closed at 93.845 up 6.5 points on light late shortcovering. The euro closed at $1.14145, up 3.5 points.

Other currencies were mixed. The Swiss franc closed at $1.0297, down 39, the Japanese yen 0.09341, up 9 ticks, the British pound $1.4428, down 50, the Canadian dollar 77.48c, down 27, and the Australian dollar 73.57c down 92 points. We remain on the sidelines.


Energies

Crude oil closed at $44.66 per barrel, up 34c while Brent crude closed at $45.37 per barrel, up 36c. A wild fire in the Canadian oil regions and an attack on the chevron offshore oil facility in southern Nigeria was a factor prompting shortcovering and buying in crude across the board. We could see further strength in crude but we prefer the sidelines.


Precious metals

June gold closed at $1,294 per ounce, up $21.70 tied to the weaker than expected U.S. jobs data lent credence to the idea that the U.S. Federal Reserve would maintain low interest rates for a longer period of time than previously anticipated. Gold gained 0.3% for the week. July silver also gained Friday gaining 20c to $17.527 per ounce, but for the week lost 1.6%. July platinum closed at $1,085.10 per ounce, up $21.30 or 2% with June palladium gaining $6.50 or 1.1% to close at $607.20 per ounce.

Continued weakness in the global economies and weakness in the dollar in which they are denominated could produce further price gains in precious metals. July copper closed at $1.1540 per pound, unchanged. With our expectation for slowing global economic growth, we expect continued weakness in copper.

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About the Author

John has over 40 years experience at major U.S. Brokerage firms as Manager and Director of various International Divisions and is the founder of his own trading and brokerage firms. Over the years John has gained a wealth of knowledge and experience in all aspects of investments and trading. He was also a floor trader at the Commodity Exchange in New York. He formed Acuvest in 1999 and can be reached at futures@acuvest.com.