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U.S. Recovery Is Still Firmly On Track – Capital Economics

Tuesday April 7, 2015 1:15 PM

Despite much weaker jobs numbers in March, Capital Economics analysts say the U.S. recovery is still firmly on track. “The run of weaker economic data hasn't shaken our belief that, now credit is flowing more freely and the fiscal drag has faded, the recovery will strengthen,” says Paul Ashworth, chief U.S. economist for the UK-based research firm. “Nevertheless, given how skittish Fed officials are, this could be used as yet another reason to delay the first rate hike until sometime in the second half of this year,” he adds. Ashworth explains that because employment figures are based on a survey only covering one week each month, the numbers don’t always “align with the activity and spending data, which cover the entire month.” “Furthermore, nearly every other indicator suggests that the labor market is in good health,” he says, noting that ISM non-manufacturing employment index improved in March, as well as the job opening rate, hit a 14-year high in February while voluntary quits rate are trending lower. “The resilience of these other indicators suggests that payroll growth will rebound in April,” he says.

By Sarah Benali of Kitco News; sbenali@kitco.com

 

Strong Dollar May Not Necessarily Be Bad For U.S. Economy – RBC Capital Markets

Tuesday April 7, 2015 11:55 AM

Although yesterday’s rally helped boost open interest in gold, one RBC analyst says some factors are working against the yellow metal. “Continued strong stocks and lower euro are some reason today for a pullback in gold,” says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. In RBC Capital Markets’ Base Metals report, analysts note that despite having backed off of 12-year highs, the U.S. dollar still remains strong against other major currencies and this may not necessarily hamper the country’s recovery. “This dollar strength is not necessarily viewed as damaging to the U.S. economy, as exports only account for about 14% of the American economy,” they note.

By Sarah Benali of Kitco News; sbenali@kitco.com

 

Constructive On Commodities In April, But Strength To Be Limited – INTL FCStone

Tuesday April 7, 2015 11:40 AM

Despite INTL FCStone analysts being constructive on commodities this month, they expect any bounces to be limited. “We are generally constructive on the commodity group going into April, as we suspect that the dollar will likely weaken further from here,” says Edward Meir, commodity consultant at the financial services firm. “However, a currency-induced bounce will have limited staying power, as focus will inevitably return to the growth picture and the implications for metals demand,” he adds. The idea that the dollar may have reached its peak and will move lower due to weaker economic data out of the U.S. is one of the main triggers behind strength in the commodities space, Meir says. However, he notes that “the conventional wisdom is that the U.S. economy should recover in Q2 as the slowdown may be weather-induced.”

By Sarah Benali of Kitco News; sbenali@kitco.com

 

More Scope For Gold To Rally – HSBC

Tuesday April 7, 2015 8:45 AM

As gold found support on Monday after Friday’s weaker jobs report, and New York Fed president William Dudley’s dovish comments yesterday, HSBC analysts said there may be more upside potential for the metal. “Gold’s break over the technical 50-day moving average of US$1,209/oz and 100-day moving average of US$1,212/oz may have invited buying from momentum investors. Furthermore, a weaker U.S. dollar provided underlying support for bullion,” they said in a research note published Monday afternoon. “There may be more scope for bullion to rally, in our view,” they added. They noted that bullion is highly sensitive to changes in monetary policy expectations, and following the weaker-than-expected nonfarm payrolls data for March, market watchers are questioning when the Federal Reserve will make its first move on rates. Quoting HSBC’s chief U.S. economist Kevin Logan, the analysts said he expects a September lift-off in rates more likely.

By Sarah Benali of Kitco News; sbenali@kitco.com

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