Equity markets slid sharply into yesterday’s close ahead of Fed Chair Powell’s second congressional testimony. Today he sits in front of the Senate Banking Committee at 9:00 a.m. Central. He commented earlier in the week that the economic outlook is strong and warrants further gradual rate hikes.
U.S. producer prices rose more than expected in January, recording their largest gain in more than four years amid increases in the cost of energy products and some services, but a strong dollar continued to keep underlying inflation tame.
Dollar bears were unleashed on Tuesday following the disappointing U.S. ISM services data which dented hopes over the Federal Reserve raising U.S. interest rates in September. The ISM non-manufacturing PMI for August came in at 51.4, making it the lowest since February 2010 consequently rekindling concerns over the health of the U.S. economy.
Gold and silver have extended their gains made on the back of the weaker-than-expected U.S. employment report on Friday. The dollar-denominated commodities have obviously found support from a slightly weaker dollar as investors lowered their expectations about the timing of the next rate increase. With the key U.S. ISM services PMI due to be released shortly, the near-term outlook for the dollar, and in turn precious metals, could change course once again.
Being a full first week of the month means the typical early month economic data deluge. That includes the various global PMI’s Monday and Wednesday. Note that each of those will be one day later for the UK that is out on Monday for its annual Early Spring Bank Holiday.
Payroll gains were ahead of expectations for March as employers added 215,000 employees. Ahead of the report market forecasters surveyed by Bloomberg estimated a monthly gain of 205,000. The unemployment rate advanced by one-tenth to 5.0% as more people were drawn to the labor force.