This week proved to be extremely adversarial to precious metals and saw spot values decline across the board. Now that the dog days of summer are behind us, the amount of activity happening on a day to day basis throughout the global marketplace has picked up considerably. Though investors in the US did not begin trading until Tuesday, this week was a good bit busier than any of the last two. With a boatload of economic data released, the market has a lot of information to chew on and digest.
In addition to the slew of economic activity happening this week, the attention of investors also shifted towards the ongoing crisis in Ukraine. Early on Tuesday it was reported that a ceasefire agreement had been reached between Ukraine, Russia, and pro-Russian rebels, but that news story proved to be nothing more than unfounded rumors. Now, as the fighting continues, it will be interesting to see what the next few weeks has in store for the war-ravaged parts of Eastern Ukraine.
ECB Announces Further Rate Cuts
One of the biggest points of interest this week came yesterday morning in the form of the European Central Bank’s most recent policy meeting. With talk of further monetary stimulus on the table, investors were tuning in to see if such policy shifts were going to take place this week. By meeting’s end, it was announced that the ECB was cutting its main interest rate down to 0.05%–the lowest it has ever been. In addition to this, the EU’s governing financial body also announced that it would soon be implementing a policy similar to the United States’ now almost finished with quantitative easing program.
Yesterday’s news prompted the Euro currency to decline even further against the US Dollar. Also as a result of yesterday’s ECB announcement the USD Index hit yet another 13-month high. In recent weeks, the US Dollar has been a consistently strong performer and has been seen making almost incessant gains. Today, however, slightly downbeat economic data from the US ended up putting a halt to the greenback’s recently impressive progress.
Non-Farm Employment Data Disappoints; Unemployment Rate Declines
Apart from the ECB meeting, the market was also very interested in today’s release of the United States’ non-farm payroll addition figures for August. Unfortunately, however, the data fell short of expectations quite considerably. Despite investors and market experts anticipating that more than 210,000 new jobs were created in August, the actual figures showed that just over 140,000 came to fruition. This data immediately had a negative impact on US equities as well as the USD index.
As you could have probably guessed, this data provided some support for metals, but this support has done nothing more than keep spot values level. The silver lining in this poor employment data is that the unemployment rate in the US fell by one-tenth of a percentage point to 6.1%. Now, investors will use this weekend in order to digest and mull over the slew of data that was made public this week.