WTI crude holds at $103.91/barrel down from the new 29-month high of $104.32 posted earlier, which took out last week's high at $103.41.
Brent stands at $116.00/barrel, down from an earlier high of $116.49, which was still well below the 30- month high of $119.79, posted Feb 24.
Stocks are threatening to break down and drop another level as they test the bottom of their recent trading range. Weakness this session has left 90% of the names in the S&P 500 to trade with losses.
Airline stocks are among the hardest hit. They surged 2.4% in the prior session as oil prices ran into selling pressure, but oil's 2.0% spike this session has sent the Amex Airline Index to a 2.1% loss. Also sensitive to higher oil prices, the Dow Jones Transportation Index has fallen to a 1.5% loss.
Steady selling pressure has taken the stock market to a new session low. The downturn has not yet undone the prior session's surge, though.
Although weakness is widespread, financials (-1.6%) are driving the downturn.
Precious metals remain strong as some seek their safety. Gold continues to trade with a 1% gain at $1431 per ounce and silver continues to trade with a 2.7% gain at $35.23 per ounce.
The dollar fell to the lowest level in almost four months versus the euro as investors speculated a gain in U.S. payrolls last month won’t be enough to spur the Federal Reserve to raise interest rates soon as the European Central Bank prepared to lift its borrowing costs.
The dollar briefly gained versus the euro after Labor Department data showed U.S. employers added 192,000 workers in February and the unemployment rate unexpectedly fell to 8.9 percent, the lowest level since April 2009.
“The unemployment number was by no means a blowout number that’s going to make the Fed consider tightening anytime soon,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “That leaves the ECB way out front in terms of interest rate differential goes.”
The dollar tumbled yesterday after ECB President Jean- Claude Trichet said the ECB may increase interest rates at its next meeting to counter inflation pressures.
Libyan leader Muammar Qaddafi sent troops to recapture towns in the western part of the country and prepared to quash protests in the capital, Tripoli. Crude oil for April delivery rose as much as 2.1 percent to $104.09, the highest since September 2008.
The Swiss franc rose against all of its 16 major counterparts as investors sought refuge amid a jump in crude oil to a 29-month high on concern turmoil in North Africa and the Mideast will disrupt supplies.
JPM says of the +3.1% Jan factory orders that transport components looked strong and price increases boosted nondurables and inventory values. They est core durable capital goods shipments were -6.2%, still very weak.
Factory orders for January increased by 3.1%, which is greater than the 2.1% increase that had been expected, on average, among economists polled by Briefing.com. Orders for the prior month were revised upward to reflect an increase of 1.4%.
There hasn't been any real reaction to those numbers. Instead, the stock market continues to chop along listlessly with narrow losses.
Advancing Sectors: Telecom (+0.4%), Health Care (+0.1%), Energy (+0.1%)Unchanged: Consumer Staples, Consumer Discretionary
Declining Sectors: Industrials (-0.6%), Financial (-0.5%), Utilities (-0.2%), Materials (-0.1%), Tech (-0.1%).
EUR/USD $1.3800, $1.3825, $1.3850, $1.3900, $1.3915, $1.3975, $1.3985, $1.4000
USD/JPY Y81.00, Y82.50, Y82.75, Y83.00, Y83.50
EUR/JPY Y113.60, Y112.00
GBP/USD $1.6300, $1.6075
AUD/USD $1.0070, $1.0100, $1.0170, $1.0200
U.S. stock futures were flat Friday, heading for a lackluster open, as investors mulled over the government's monthly payrolls report.
Economy: The economy added 192,000 jobs in the month - roughly in line with expectations, as the unemployment rate ticked down to 8.9%.
The economists were predicting that the economy had added 190,000 jobs in February.
Economists also expected the unemployment rate to rise to 9.2%.
A report on factory orders is due after the opening bell.
Companies: Family Dollar (FDO, Fortune 500) rose about 4% over reports that it rejected a takeover offer from investor Nelson Peltz.
Commodities: Oil prices rose back near the top of a recent range, hitting a high near $103 a barrel in early trading.
Dollar draggs down after Payrolls come near as expected, curbing demand for safe-heaven. EUR/USD challenged $1.4000 and currently holds around $1.3986. Options at $1.4000 with stops above $1.4010. Offers around $1.4020/25.
The nonfarm payrolls released by the US Department of Labor is one of the most important data. The report presents the number of people on the payrolls of all non-agricultural businesses.
Analysts expect the report to show a rise of 185,000, following a tepid 36,000 increase previously.
08:00 UK Halifax house price index (February) -0.9% -0.6% 0.8%
08:00 UK Halifax house price index (February) 3m Y/Y -2.8% -2.5% -2.4%
The dollar fell to its weakest level in four months against the euro as stock markets rose before a report that may show U.S. employers added the most jobs since May, curbing demand for the currency as a haven.
The euro headed for a third straight weekly increase against the greenback, the longest run of gains since October, after European Central Bank President Jean-Claude Trichet said yesterday the ECB may increase interest rates at its next meeting.
The euro has jumped 1.3% since Feb. 25 against a basket of developed nations’ currencies as investors increased wagers the ECB would raise it key rate, which is already 0.75% higher than the upper end of the Federal Reserve target range.
An “increase of interest rates in the next meeting is possible,” Trichet said yesterday. Trichet and board member Lorenzo Bini Smaghi are among the ECB policy makers scheduled to speak in Paris and Cape Town today.
“It’s absolutely clear that the ECB will raise rates in April, with some now expecting 75 basis points worth of hikes this year,” said Yuji Saito at Credit Agricole Corporate & Investment Bank. “The euro will likely strengthen further, initially targeting $1.4080,” the Nov. 8 high, he said.
Sterling declined against the dollar after house prices fell in February, fueling concern that the economic recovery won’t be sustained.
U.K. house prices fell 0.9% from January, when they rose 0.8%. Britain’s economy shrank 0.6% in the fourth quarter.
EUR/USD holds within the $1.3950/80 range.
GBP/USD initially fell to session lows around $1.6232 before it recovered to $1.6306. Rate failed to hold above and was back under Y1.6300.
USD/JPY rose from Y82.30 to current Y82.75.
U.S. nonfarm payrolls report is due to come at 13:30 GMT. Analysts expect the report to show a rise of 185,000, following a tepid 36,000 increase previously.
Oil rises, heading towards the recent high set on Feb 24 (now initial resistance) at $103.41, despite overbought daily studies. Further resistance seen as the daily Bollinger band top at $105.55. Initial support seen as the 5-DMA and the Mar 1 high at $100.65/69 with further support seen as the 23.6% Fibonacci of $83.85/103.41 at $98.79.
The euro rose to a fresh 4-month high against the dollar on Friday on expectations the European Central Bank may raise rates next month following comments by ECB President Jean-Claude Trichet the previous day.
"The market was unprepared for Trichet to lay the foundation for an April rate hike," said David Watt, strategist at RBC Dominion Securities.
Comments by ECB official Nout Wellink added to this view on Friday, when he was quoted in DNB magazine saying the central bank should raise rates sooner or later.
"We think the euro will remain strong in the next week or two, possibly even testing...highs of $1.4280," said Christopher Gothard, head of FX for Brown Brothers Harriman, referring to the euro's next major peak on charts, its early November high of $1.4283.
"Trichet's comments have bolstered rate hike expectations, and even though we're not certain the scenario of an April hike will play out - Europe still has the fiscal debt issues and poor growth in many areas - for the moment it's providing support," Gothard added.
In a sign of its broad strength in the wake of Trichet's comments, the euro hit a 10-month high against the New Zealand dollar of NZ$1.8935 on Friday and touched a five-week high versus the Australian dollar near A$1.3800 .
The dollar's near-term direction hinges on U.S. non-farm payrolls data due later on Friday. Analysts expect the report to show a rise of 185,000, following a tepid 36,000 increase previously.
"That will be good for the dollar and especially dollar/yen. Markets are currently priced for no rate hikes in the U.S. until 2013. I think that (rate) call will start coming back in and that will be positive for the dollar," a trader at a U.S. investment bank said.
A disappointing number, however, could fan worries about the outlook for the U.S. labour market, especially given uncertainty about how the recent surge in oil prices may affect the U.S. economy and companies, Robert Ryan, FX strategist at BNP Paribas. "If we get something below 125,000 or 120,000 I think there will be an enormous amount of disappointment," Ryan said. "We could very quickly start talking about QE3 as a realistic prospect," he said, referring to the issue of whether the U.S. Federal Reserve will take further quantitative easing measures after its $600 billion bond-buying programme is over.
USD/JPY remains higher after it passed the Asian highs of Y82.46 and offers at Y82.50 to a high of Y82.62. Rate currently holds around Y82.52. Resistance is seen at Y82.72 ahead of further stops reportedly at Y83.00.
The euro climbed to almost four- month highs versus the dollar and yen after European Central Bank President Jean-Claude Trichet said the ECB may raise interest rates next month to counter accelerating inflation.
“Strong vigilance is warranted,” Trichet told reporters in Frankfurt after the central bank left its main refinancing rate at 1 percent.
An “increase of interest rates in the next meeting is possible,” Trichet said, adding that any increase would not necessarily be the start of a “series” of moves.
Rising oil prices, which surged over $100 a barrel last week, and faster economic growth are fanning inflation which has already breached the ECB’s 2 percent limit for three straight months. At the same time, officials must weigh any rate increase against the risk it will exacerbate Europe’s sovereign debt crisis by tightening policy too soon.
The dollar slumped versus the euro even after a report showed initial jobless claims in the U.S. unexpectedly declined last week to the lowest level since May 2008.
Applications for unemployment benefits decreased by 20,000 to 368,000 in the week ended Feb. 26, Labor Department figures showed. Economists forecast claims would climb to 395,000. The total number of people receiving unemployment insurance fell to the lowest level since October 2008.
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