Dol­lar pun­ished by dis­ap­point­ing jobs re­port; Oil jumps on OPEC deal

Financial Mirror (Cyprus) - - WORLD - By Luk­man Otu­nunga, Re­search An­a­lyst at FXTM

Ap­petite for the Dol­lar di­min­ished on Fri­day after Novem­ber’s dis­ap­point­ing US jobs re­port re­in­forced ex­pec­ta­tions over the Fed tak­ing a pause on rate hikes next year. The United States added an­other 155,000 jobs last month, which was be­low the 189,00 fore­cast, while Oc­to­ber fig­ures were re­vised lower to 237,000 from the first es­ti­mate of 250,000. With wage growth also fall­ing short of mar­ket ex­pec­ta­tions - ris­ing only 0.2% m/m vs the 0,3% fore­cast - the Dol­lar has found it­self back in the crosshairs of bear­ish in­vestors.

Fri­day’s unin­spir­ing re­port cer­tainly ad­dresses re­cent con­cerns over the US econ­omy po­ten­tially de­cel­er­at­ing, given the in­ver­sion of the US Trea­sury yield curve ear­lier this week. Although the un­em­ploy­ment rate re­mained un­changed at 3.7%, the over­all US jobs re­port re­mains Dol­lar neg­a­tive and is likely to cre­ate some un­cer­tainty over the Fed’s hik­ing path be­yond De­cem­ber. In re­gards to the tech­ni­cal pic­ture, Dol­lar bulls are in trou­ble on the daily charts. Sus­tained weak­ness be­low the 97.00 level is likely to send the Dol­lar In­dex to­wards 96.40 in the near term.

OPEC + agree to cut oil pro­duc­tion

A col­lec­tive sigh of re­lief was felt across Oil mar­kets after OPEC+ del­e­gates suc­cess­fully reached an agree­ment to cut pro­duc­tion by 1.2 mil­lion bar­rels per day. OPEC na­tions have agreed to trim pro­duc­tion by 800,000 bar­rels, while nonOPEC mem­bers will han­dle the re­main­der.

This break­through in talks is a wel­come de­vel­op­ment for fi­nan­cial mar­kets and is seen sup­port­ing risk sen­ti­ment dur­ing the up­com­ing trad­ing week. With OPEC agree­ing to cut Oil pro­duc­tion larger than ini­tially ex­pected, Oil prices are poised to ex­tend gains in the short term. How­ever, the medium- to longer-term out­look re­mains open to ques­tion.

Keep in mind that US Shale pro­duc­tion re­mains as ro­bust as ever, while con­cerns over slow­ing global growth are fu­elling fears of fall­ing de­mand for Oil. If es­ca­lat­ing US-China trade ten­sions evolve into an all-out trade war, Oil mar­kets will cer­tainly be one of the many ca­su­al­ties. Although WTI Crude staged a solid re­bound fol­low­ing the OPEC pro­duc­tion cut, bulls have a long way to go be­fore re­claim­ing any sort of con­trol. A weekly close above $54.00 is seen open­ing a path to­wards $56.00 and $57.40 in the short to medium term.

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