The data published today from the U.S. labor market was well below the market consensus. In fact, the number of creation of new jobs in one month has fallen to pre-epidemic levels, which is very worrying, because at this rate it will take years to rebuild employment.
Only 245,000 new jobs were created in November in non-farm sectors in the U.S. with a consensus of 469,000. This is the smallest increase in employment since May and is similar to the growth in the pre-pandemic economy. The US lost more than 20 million jobs as a result of COVID-19 and only about half of them were rebuilt. In November, employment was reduced in the government sector and in retail trade, which may have been due to local restrictions in the USA. In turn, employment growth slowed down in transportation, business and professional services and health care. The outlook for the labor market in December and January remains difficult as coronavirus infections continue to grow and more states have introduced restrictions, while a new bill with a fiscal package to support millions of Americans has not yet been approved. Perhaps this is the reason why American stock indices are listed in green. The worse the economy, the more the market expects help from the Fed and the government.
Summing up this week, let's also look at the financial instruments that have done best and worst, among the most popular ones. Silver seems to gain the most on a weekly basis, with a rate of return of more than 7%. Gold gained more than 3%. On the one hand, the rebound on these markets appeared with a significant weakening of the U.S. dollar and perhaps a technical end to the corrections. Economic activity, especially in China, seems to be improving, which may be beneficial for the industrial metal, which is mainly silver, and in turn, inflation expectations, which increased to the highest level since May, may be beneficial for gold.
The aforementioned US dollar seems to be losing more than 1.3% this week, which means that it has deepened the declines to the levels we recently observed two years ago. The euro and the Swiss franc have strengthened to the US dollar by about 1.7%. The pound gained 1,5%.
For the currency market, next week's meeting of the European Central Bank, scheduled for Thursday 10 December, may be crucial. Investors will be waiting for changes in the asset purchase program, but most importantly, there may be some form of intervention due to the stronger euro. This could change the balance of power on the market at the end of the year.
________
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
