Forex – The euro fell to a two-year low against the US dollar on Friday after a report showed US employers hired at a dismal pace in June, stoking strong risk aversion and a flight to safe havens that put recent central bank interest rate cuts in stark relief. The report appeared to fuel concerns that Europe's debt crisis is shifting the US economy into low gear. It raised pressure on the Federal Reserve to do more to boost the economy and dealt another setback to President Barack Obama's re-election bid. The Labour Department said on Friday that non-farm payrolls grew by just 80,000 jobs in June, the third straight month below 100,000. Job creation was too weak to bring down the country's 8.2 percent jobless rate. While Obama holds a narrow lead in most national polls, many voters are critical of his handling of the economy. Speaking at a campaign rally in Ohio, Obama said the pace of job creation needs to pick up.
Last month, the Fed extended a program aimed at keeping long-term interest rates down and said it was prepared to do more to spur the economic recovery if needed. The sombre jobs report could move the central bank closer to a third round of so-called quantitative easing, or QE3. Economists estimate roughly 125,000 jobs are needed each month just to hold the jobless rate steady. During the second quarter, job creation averaged 75,000 per month, down from an average of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring during the winter at spring's expense. But weakness in everything from factory activity to retail sales suggests something more fundamental is at play and the jobs data buttressed that view.
Debt woes have bogged down much of Europe, sending some countries into recession. The crisis in turn has dulled economic growth around the world and central banks in China, the euro zone and Britain all eased monetary policy on Thursday.
Indices – Stocks fell, the euro hit a two-year low against the dollar and oil slumped more than 3 percent on Friday after disappointing US jobs growth reinforced worries the American economy was mired in a slow-growth rut. The US Labour Department reported that employers created only 80,000 jobs in June, far fewer than needed to bring down the 8.2 percent unemployment rate and adding to evidence that Europe's debt crisis was weighing on global growth. Although the jobs creation was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing. Though Fed action might cheer some investors, many doubt the ability of central banks to lift the economic gloom. More than two-thirds of companies traded on both the New York Stock Exchange and Nasdaq fell. The US jobs data came a day after the European Central Bank cut interest rates, further dampening the euro's appeal, and China and the Bank of England announced more monetary easing. With US interest rates already near zero the loosening of monetary policy in Europe and China diminishes the relative interest rate advantages held over the dollar.
The European Central Bank cut rates to a record low 0.75 percent following a dire run of economic data. But it steered clear of bolder moves such as reviving its government bond-buying programme or flooding banks with more long-term liquidity. The Bank of England, whose rates are already at a record low 0.5 percent, said it would restart its printing presses and buy 50 billion pounds ($78 billion) of assets with newly created money to help the economy out of recession.
Commodities tumbled on Friday by their most this year, eroding their second successive weekly gain after dismal US jobs data fuelled worries about the global economy and raw materials demand. US data showed non-farm payrolls expanded by only 80,000 jobs in June, weaker than forecast and the third straight month that fewer than 100,000 jobs were created. The unemployment rate remained at 8.2 percent. The dollar rallied and US stocks fell, a recipe for selling raw materials.
Most commodities began to fall early, a day after the European and Chinese central banks trimmed rates and Britain's bank extended a bond-buying scheme. Those measures sparked worry among many investors that the global economy was deteriorating rather than hope for quicker economic growth.
Gold dropped more than 1 percent for the week, as prices slid on Friday after data showed US nonfarm payrolls grew at a less-than-expected pace in June. Gold has been particularly sensitive to central banks' monetary policies. In February, it was up 15 percent for the year after the Fed said it would keep interest rates near zero until late 2014.
Crude Oil – Crude prices fell sharply on Friday after a report showing tepid US jobs growth in June reinforced concerns that a sluggish global economy will curb demand for petroleum. Oil fell more than 3 percent and posted a 51-cent weekly loss. Commodities tumbled on Friday by their most this year, eroding their second successive weekly gain after dismal U.S. jobs data fuelled worries about the global economy and raw materials demand. Adding to the bearish tone, the head of the International Monetary Fund voiced concern over the deterioration of the global economy, saying the IMF will downgrade some of its forecasts.
US crude oil stocks dropped more sharply than expected last week after Tropical Storm Debby disrupted imports, while improving demand kept most refiners operating at high rates, government data showed on Thursday. Domestic stocks of crude, excluding oil held in the Strategic Petroleum Reserve, dropped 4.27 million barrels to 382.9 million barrels in the week to June 29, the Energy Information Administration reported. Analysts had forecast a drop of 1.9 million barrels. Gasoline inventories rose by 151,000 barrels compared with analyst forecasts for a 600,000-barrel increase. Distillates, which include diesel and heating oil, fell by 1.1 million barrels versus a forecast 600,000-barrel increase amid signs of increasing end-user demand.
Iranian parliamentarians proposed a bill to stop tankers taking oil to supporters of US-led sanctions and a European Union embargo from passing through the Strait of Hormuz. Iran had previously threatened to shut the strait if the EU went through with its embargo threat. About 17 million barrels a day of oil, almost a fifth of global production, from the top Middle East producers sailed through the strait in 2011. The EU embargo on Iranian oil took full effect last Sunday after the latest talks between Tehran and major world powers in June failed to move the parties closer to resolving the dispute over Iran's nuclear program. A heavy western naval presence in the Gulf and surrounding area is a big impediment to any attempt to block the vital shipping route through which sails most of the crude exported from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq and nearly all the gas exported from Qatar. Top oil exporter Saudi Arabia has already taken precautionary steps against the possibility of Iran shutting down Hormuz, including the reopening of an old pipeline built by Iraq to bypass the strait and export more crude via the Red Sea terminals.
Natural Gas – Gas prices were flat to lower on Friday as very hot weather was expected to subside thus reducing demand to cool homes, plus weekend demand for natural gas is generally lower as businesses remain shut.
The US Energy Information Administration released data on Friday that showed the nation's supply of natural gas rose by 39 billion cubic feet, 5 bcf less than expected. Total gas in storage now stands at 3.102 trillion cubic feet, 24.1 percent above a year ago and 22.7 percent above the five-year average.