Non-Farm Payrolls report was unexpectedly positive as the U.S. economy created
471,000 new jobs in July compared to 250,000 expected by analysts. The
unemployment level dropped to 3.5% from 3.6% a month earlier, or to a minimum
since the pre-pandemic levels in February 2020. Hourly average wages rose by
5.2% year-on-year and 0.5% compared to June figures vs expected 4.9% and 0.3%
respectively. The U.S. Dollar index (DXY) rose above 106 points.
optimism was not only fueled by the strong labour market in the United States,
but also by the U.S.
prices are declining as the global economy is slowing down towards a recession.
Brent crude prices dipped from $108 per barrel below $100 after the U.S. Gross
Domestic Product (GDP) dropped by 0.9% in the second quarter of 2022 following
a contraction of 1.6% in the first three months of the year. The second
consecutive quarterly decline of an economy formally means a technical
in Europe jumped to 197 Euros per MWh after Russia’s Gazprom announced that it
is halting another turbine in the North Stream 1 gas pipeline, lowering gas
supplies to 20% of the pipeline’s regular capacity. Gazprom also claimed that
the first turbine that was sent to Canada for regular annual maintenance has
not yet been delivered back. The gas monopoly blamed Western sanctions as the
main issue for the inability to restore North Stream 1 to full capacity.
The European Central
Bank (ECB) will announce its monetary policy decision t on July 21, ahead of the
Federal Reserve (Fed) that will have its meeting on July 27. The timing may
affect the ECB’s decision, but it may be even more intriguing to see how far
both regulators are willing to go.
The ECB has to raise interest
rates, and it may be the case of the higher the better as it is lagging behind
the Fed’s monitoring hiking attempts to combat inflation. Consumer prices in
Europe jumped from 2.2% year-on-year in July 2021 to 8.6% now.
Zealand Dollar or Kiwi is suffering from the record inflation of 6.9%, which
has not been seen in the last 30 years. The Reserve Bank of New Zealand (RBNZ)
was forced to hike its interest rates to 2.5% from the previously set 2%.
Moreover, RBNZ warned that interest rates would reach 3.5% by the end of 2022
and 4.0% in 2023. Such monetary actions usually lead to a strengthening of the
But this does
not seem to be the case now as the U.S. Dollar is outweighing the Kiwi as the U.S.
has reached parity with the U.S. Dollar for the first time in 20 years, but it
seems that the Euro could be on its way down as there are internal reasons why
the single European currency could decline while the Greenback could rise
further. The Dollar has been rising aggressively over the last couple of
months. The U.S. Dollar index (DXY) climbed from 95 points at the beginning of
2022 to 108 points, or 14%, recently.
is strengthening as the Federal Reserve (Fed) continues to tighten monetary
policy by drastically raising interest rates to combat record inflation.
has lost 10% against the U.S. Dollar since the beginning of 2022 and is now
close to being on an equal path to the Greenback. This week the single European
currency fell dramatically to the 1.01 level, a level, which was lastly seen20
a weaker Euro is considered to be an advantage for the export oriented European
economy, and in this kind of a situation the European Central Bank (ECB) normally
advocates for the single currency to decline. However, recent realities make
this issue more complicated.
market in Europe was on alarm recently as prices for July 2022 Dutch TTF gas
futures jumped to 133 Euros per MW last Friday. Prices scaled back to 129 Euros
on Tuesday, but they are unlikely to reach a deeper correction.
surged as Russia significantly reduced gas supplies to Europe during the period
when gas was being replenished into gas storages in preparation for the coming winter
season. Storages are reported to be filled by 59% of their total capacity,
which is a low percentage for this time of the year.
Europe is beginning
to suffer from the physical shortage of gas. There are many reasons for this
that supplement each other. The Freeport LNG Quintana Island liquefaction facility is currently shut down after a gas
blast and will not continue its full operation until late 2022. This facility
exports around 20% of LNG from the United States that primarily goes to Europe.
Gas exports via the North Stream pipeline to Germany have been dramatically
cut by 100 million cubic meters per day or 60% of the regular supply.
Lead is a
toxic metal for humans by its nature. And it seems that now it is also toxic
for investments as its price dropped by 3% on the London Metal Exchange this
Monday, from $2150 to $2087 per tonne.
It is a
production metal that is sensitive to economic growth perspectives and, as
such, its price significantly dropped at
the beginning of the week after the United States was hit by a huge
inflationary shock. Consumer prices rose unexpectedly by 8.6% year-on-year in
May after posting 8.3% in April.