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Commodity Research Report: Metals and Energy Weekly Report

The December Department of Labor Monthly Payroll report showed a huge miss with only 74,000 new hires in the month of December. Perversely, the unemployment rate declined from 7.0% to 6.7% due to the cessation of extended benefits for 1.6 million people....
14 Jan 2014 | 06:40 PM

Highlights:

  • The December Department of Labor Monthly Payroll report showed a huge miss with only 74,000 new hires in the month of December. Perversely, the unemployment rate declined from 7.0% to 6.7% due to the cessation of extended benefits for 1.6 million people.
  • U.S factory orders rose 1.8 per cent in November, the Commerce Department said. That follows a 0.5 per cent decrease in October.
  • The U.S. nonmanufacturing sector's expansion remained on track in December but at a slower pace than expected, according to data released by the Institute for Supply Management. The ISM's nonmanufacturing purchasing managers index slowed to 53.0 in December from 53.9 in November.
  • U.S. exports of goods and services climbed to a record high in November, reaching $194.9 billion compared with $193.1 billion in October, the Commerce Department said. The November trade deficit declined to $34.3 billion from $39.3 billion in October, reflecting a surge in domestic energy production and stronger global demand for U.S. products.
  • In U.S, private sector employment increased by 238,000 jobs from November to December, according to the December ADP National Employment Report.
  • The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.68 million barrels in the week ended Jan. 3, beating expectations for a decline of 849,000 barrels. Total U.S. crude oil inventories stood at 357.9 million barrels as of last week.
  • The report also showed that total motor gasoline inventories increased by 6.24 million barrels, significantly higher than expectations for a gain of 2.28 million barrels. Inventories of distillates, which include diesel fuel and heating oil, rose by 5.83 million barrels compared to market calls for a gain of 1.90 million.
  • Federal Reserve policy makers were confident last month that the economy was strong enough to begin scaling back the Fed’s bond purchasing program, believing a modest tapering of quantitative easing wouldn’t negatively impact mortgages and other long-term loans, according to FOMC Minutes released.
  • The minutes indicated the central bank is increasingly concerned about inflation levels that are running well below the targeted 2% rate even as the U.S. economy recovers at a swifter pace.
  • Initial jobless claims fell 4.3% to 330,000 for the week ending Jan. 4, according to a Labor Department report released.
  • Gas companies pulled 157 billion cubic feet from storage to meet demand in the week ended Dec. 3, the Energy Information Administration reported. That was in line with the forecasts.
  • India's foreign exchange reserves declined by USD 2.599 billion to USD 293.11 billion in the week ended January 3 on account of a fall in foreign currency assets, RBI said.

  

Week Ahead: Silver (Buy)

 

  • Weaker-than-expected U.S. jobs data supported the view that the U.S. Federal Reserve will take a gradual approach to tapering its bond-buying programme this year.
  • U.S. nonfarm payrolls rose just 74,000 in December, the smallest increase in nearly three years and far below the 196,000 forecast by economists. Prices gained safe haven status as unemployment rate fell 0.3 percentage point to 6.7 percent.
  • Surging geo-political tensions in Middle East is expected to drive more demand in Silver incase investors look out for safety against crisis.

Weakness in dollar against a basket of currencies may offer upside for silver in the coming week.