Shocking Week For Some By Investing.com

Invest. com – It has been a shocking and disappointing week in terms of the pace of the economic recovery in the United States of America, which has given rise to many concerns.

However, the weekend has arrived and contrary to fears that have clouded the US economy and spilled over to the dollar, it has been positive for gold, which shines in crises.

Parents

And gold rose last Friday at the end of trading on the world market by 1.02%, or gains of around $ 18.4, to reach levels of $ 1,829.9 per ounce in immediate delivery. .

As the dollar broadly ended Friday’s trading lower, it fell, which measures the currency’s performance against a basket of 6 major currencies, by 0.12% to 92.12.

The ounce of gold rose during the week by over $ 10 from levels of $ 1,819.5 to levels of $ 1,829.9.

The dollar index fell during the week, dropping from 92.69 levels to its lowest level in nearly two months at 92.12.

disappointing

The August 2021 jobs report provided shocking data to the market as it was weaker than expected, raising concerns about the pace of the economic recovery in the United States.

The release of the data coincided with the Federal Reserve considering cutting back on its monetary stimulus program. Where the report from the Ministry of Labor showed that non-farm payrolls increased by 235,000 last month, less than 490,000 compared to market expectations which indicated the possibility of registering an increase of 725,000 jobs.

However, the unemployment rate fell from 5.4% to 5.2% and the average hourly income increased by 4.3%.

Following the release of this data, the US dollar fell to its lowest recorded level in a month, hitting 91.947, due to the labor market not being as flexible as the markets expected.

In contrast, the exchange rate reached its highest level recorded in two months against the dollar, reaching the level of 1.1909.

In addition, the chances of the Federal Reserve raising interest rates in December 2022 have fallen to 68% while the 3-month London Interbank Offered Rate (Libor) also hit an all-time low of 0.1155% on Friday. .

Confidence is falling

Concerns over the spread of the mutated Delta strain and rising prices have affected the expectations of U.S. consumers.

The Conference Board’s consumer confidence index fell to 113.8 points, from 125.1 points revised in July, compared to expectations that the index would hit 123 points.

After the recent surge in virus cases, reservations for restaurants, travel agencies, airlines and hotel occupancy declined due to the negative impact on sentiment.

The current conditions index fell to its lowest level since April, hitting 147.3 points, while the dominant expectations axis fell to its lowest level in 7 months, its reading falling to 91.4 points.

Develop despite the challenges

Activity in the US manufacturing sector improved in August, indicating an acceleration in orders and production growth in conjunction with persistent supply chain challenges.

In addition to supply chain bottlenecks, manufacturers also encountered labor availability issues, which resulted in longer delivery times.

According to data from the Institute for Supply Management, the manufacturing sector index stood at 59.9, down from 59.5 in July, moving away from the 50 mark that defines expansion and contraction.

Europe’s attempts

German manufacturers struggled to meet demand in August due to higher prices and a tight supply of raw materials and other components such as semiconductors.

The final IHS Markit PMI reading fell to 62.6 from 65.9 recorded in July, hitting its lowest level in 6 months while remaining well above the reading of 50 indicating expansion.

With new orders reaching an all time high, production fell to a level not seen in over 25 years.

The German economy rebounded in the second quarter of 2021 with growth of 1.6% compared to the previous three months, in connection with the relaxation of restrictions linked to the Covid-19 pandemic.

The government expects growth of 3.5% this year and 3.6% next year.

Inflation at its peak

The inflation rate in the euro area has increased during the current month to reach its highest level recorded in 10 years, with the possibility of further increases, posing a challenge for the European Central Bank in terms of increase prices and his commitment to overcoming the idea that what he is currently witnessing is a temporary increase.

Consumer prices in the 19 member states of the European Union rose 3% this month, after rising 2.2% in July, well above expectations of 2.7% and far from the European Central Bank’s 2% target.

According to data from Eurostat (the statistical agency of the European Union), the increase is due to rising energy costs, food prices have also increased and industrial product prices have also experienced unusually high increases.

goods

Despite the Biden administration’s call for increased oil production, OPEC and its allies have decided to go ahead with the implementation of the previous plan to gradually increase oil production.

The details of the approved plan are to increase total production by adding 400,000 barrels per day until the pandemic-related reductions are phased out.

The White House had previously urged OPEC to increase production at a faster rate to meet global demand as the global economy began to recover from the pandemic.

Meanwhile, OPEC members said it was still too early to step up the pace of supply as many countries around the world continue to face challenges from the outbreak of the mutant delta strain. .

Even with the decision by OPEC and its allies to resume production increases, the group expects difficult conditions for global oil markets to continue this year before returning to surplus in 2022.

The latest reports from the International Energy Agency found that the recent increase in coronavirus cases “has sharply lowered” the outlook for global oil demand, with part of the recovery expected this year moving to 2022.