This morning’s ADP private payrolls report showed that 189,000 new jobs were created in March, well below economists’ expectations for around 225,000. This has Wall Street anticipating a trading day in the red, while gold and the other precious metals were on the rise this morning. The yellow metal was moving more than $10 higher back near $1,195/oz this morning, while each of the other metals were up about 1%.
Yesterday in the Markets
Stocks finished deeply in the red yesterday as renewed volatility has returned to the markets. The metals were mostly flat while the dollar remained steady around 98.0 on the DXY. Bonds saw fresh demand, pressing 10-year yields below 1.90%.
Factors Affecting Gold Today
Though stocks were hurting in the States, European shares were solidly in the green this morning as the region’s economy shows early signs of shoring up. Manufacturing in the U.K. hit an 8-month high, while Spain, Italy, and Germany all showed impressive manufacturing growth. The Markit PMI index hit a 10-month high for the eurozone, and the euro was steady around $1.07.
All of this good news is lessening the potential blow of a “Grexit,” giving Europe more leverage in its hardline negotiations with the indebted Greek government. Not only have some pundits, including mega-investor Warren Buffett, opined that the loss of Greece from the EU may not necessarily be a bad thing for the euro, which saw its largest quarterly losses ever in the first quarter of 2015. The risk of Greece defaulting seems to be mounting, as Yanis Varoufakis, the country’s finance minister, has even suggested that the country would replace the euro area’s common currency with Bitcoin.
Western powers, including the U.S., are locked in their own intense negotiations with Iran in an attempt to rein in the country’s uranium enrichment program for nuclear power. Although nothing is set in stone, murmurs are that the two sides are close to a deal. Both crude oil benchmarks were higher this morning on the possibility of an accord with Iran, which holds the world’s fourth-largest oil reserves. This may help reverse the downward trend for oil; mixed with the strong dollar making American exports more expensive overseas, the U.S. has especially been hit by the thousands of layoffs in the energy sector due to tumbling oil prices.
In Latin America, Brazil is gripped by its own economic (and political) crisis. The country is on the brink of fiscal hemorrhaging as its currency, the real, is in the freefall and rumors of scandal and corruption at the state-owned oil giant, Petrobras, abound. The Brazilian economy has been among the world’s worst performing since President Dilma Rousseff took office four years ago: the real has lost 48% of its value, and the country’s benchmark Bovespa stock index has sunk 26%. It is no surprise that the president currently has her lowest approval rating thus far in the administration. Many investors are treating Brazil, which only five years ago seemed like the next booming emerging market in the world, with the same wariness and sense of risk as the fledgling economies of Southern Europe (Italy, Spain, Portugal, Greece).
Janet Yellen will once again be trotted out to speak tomorrow morning at 8:30 ET. Factory orders, weekly jobless claims, and international trade data will be released for the U.S. as well. Abroad, Canada’s merchandise trade numbers and the minutes from the ECB’s last meeting will be released, while PMI data for India, Britain, Japan, and China will be announced.