The beginning of the week was largely quiet, and there were no noticeable or strong moves in light of the official holidays of some markets. The highlight was the testimony of Mario Draghi, Governor of ECB before the European Parliament, who stressed the need for the stimulus program as inflation remained far from the desired levels and it is too early to talk about the beginning of tapering.
US Employment Data Disappointed Market Expectations When it slowed down in May, the employment change fell sharply, and adding just 138K new jobs, while last month's reading was revised down from 211K to 174K jobs. Unemployment rates fell to their lowest levels since 2001 at 4.3%. Wage growth was also disappointing and the annual rate rose by 2.5%.
The impact of these data was clear on the US dollar, which fell against most of its rivals, especially the Japanese yen and the euro in addition to gold, as the euro rose to a seven-month high at 1.1282, and gold rose strongly above the level of resistance at 1270$ to reach its highest level in a day since April 25 at 1276.46$ per ounce, while USDJPY fell to re-test the strong support level at 110.45.
However, markets still expect to raise interest rates at the mid-month meeting, with expectations reaching 87%, down slightly from 89% based on FED Funds Futures prices.
In the beginning of the week, The euro fell against the US dollar to its lowest level since May 19 at 1.1109, following reports that Greece intends to default on the debt premium due in July if creditors don’t reach a solution on Greek debt relief, then the Greek government came out to negate these news and said that the statement of the Minister of Finance were distorted in this regard, pointing out that they are confident that a solution will be reached in mid-June when euro zone finance ministers meet again.
Sterling Pound faced some pressure when a poll showed it was difficult for the Conservatives to get the majority in parliament when the elections are held next week. GBPUSD dropped to its lowest level in almost a month at 1.2775 before rebounding back to 1.29, In light of the continued progress of the Conservative Party in opinion polls.
In Japan, policy makers stressed that there is no current thinking about the future of monetary policy, and the current policy could push inflation to BOJ's target.
The pressure on the oil markets didn't move away after the dramatic drop in crude oil prices following OPEC's agreement to extend the production cut last week, where it managed to exceed the level of support at the level of 48$, and reached to lowest level since May 10 at 46.72$ per barrel. Goldman Sachs has cut its forecast for oil prices this year, which weighed heavily on oil trades this week.
In the morning, Donald Trump, the president of the United States, announced the withdrawal of the United States from the Paris Convention on Climate Change, as he sees it harming US economic growth. He also announced that he will start negotiations for a fair agreement, saying If that happens, it will be great, if not that’s fine.