Oil and the dollar rebounded after the release of better-than-expected macroeconomic data in the United States, particularly on the employment front.
U.S. economic recovery continues, despite uncertainties
In the wake of the release of the Fed’s latest Beige Book, which found continued “light to moderate” growth in the United States, despite uncertainties related to the coronavirus pandemic, the day’s macro-economic data came out better than expected.
Unemployment registrations were lower than expected last week, at 787,000, down 55,000 from the previous week. Consensus was positioned at 870,000 jobless registrations. The four-week average now stands at 811,250, down 21,500.
In addition, the real estate market remained strong in September, with re-sales of old homes of 6.54 million, compared with 6.2 million consensus and after 6 million in August. Thus, home re-sales are even at their highest level since 2006!
Finally, the Conference Board’s Leading Indicators Index also rose more than expected in September, up 0.7% month-on-month, compared with an expected 0.6%. However, this indicator, used by economists to anticipate the development of activity in the next three to six months, slowed down its pace compared to August, when it had jumped by 1.4%.
Oil prices rebounded on Thursday after falling 3% to 4% the previous day, fearing sluggish global demand, as Europe faced further significant restrictions in the face of the coronavirus resurgence. The December contract for U.S. light crude (WTI) gained 1.5% to $40.64 on the Nymex (after -4% on Wednesday), while the Brent contract for delivery in December gained 1.8% to $42.46 (after -3.3% on Wednesday).
Gold, on the other hand, took profits after three sessions of gains. The yellow metal ounce ended down 1.30% at $1,904.60 for the December comex futures contract, still keeping the $1,900 threshold. The yellow metal has gained about 25% since the beginning of the year, taking advantage of the economic uncertainties linked to the health crisis and the extensive monetary and fiscal stimulus plans, which are anticipating a return to inflation in the medium term. Gold had benefited in recent days from a bout of weakness in the dollar, which made buying raw materials less expensive for international buyers.
However, the greenback regained strength on Thursday in the foreign exchange market, supported by strong US “macro” indicators. The dollar index (which measures its evolution against a basket of 6 currencies) recovered 0.33% to 92.92 points, while the euro gave up 0.36% to $1.1818.
In the U.S. bond market, the yield on the 10-year government bond (T-Bond) rose another 4 basis points to 0.86%, rising to its highest level since last June in the hope of a new us fiscal support plan.