Fundamental Comment

Investors to watch US jobs report, PMIs this week

Investors to watch US jobs report, PMIs this week

Financial markets' participants will be carefully watching a number of important reports, the foremost of which is the jobs report in the United States, in addition to the final Manufacturing and Service PMI released from a number of major economies.

It should be noted that the indicators of manufacturing and services published by the Chinese economy are expected to be of great importance in light of the spread of the Corona virus inside and outside China.

US Dollar

Certainly, the jobs report is expected to be the most important and influencing on the movements of the U.S. dollar, as it is considered a leading indicator used by the Federal Reserve to determine the future of monetary policy.

The non-farm payrolls may indicate that American employers created 178,000 jobs in February, and the unemployment rate has stabilized at 3.6 percent, according to median forecasts.

The final composite purchasing managers' report for the services and manufacturing sectors for February will also be of interest to investors, as it may give an initial impression of the pace of growth in the US economy in the first quarter.

The Composite PMI may point to contraction to 49.6 in February, compared to January's reading of 53.3. A reading above 50 indicates growth while a below it refers to contraction.

It is worth noting that there is a growing expectation that the Fed may cut interest rates in either March or April to overcome the negative economic effects related to the spread of the Coruna virus.

Euro

The euro will likely be affected by the release of important economic data from the euro area, as investors will focus on the final manufacturing and services PMI readings.

The Composite index, which includes both manufacturing and services, may confirm the improvement in growth in February to 51.6 from 51.3 recorded in January.

Investors will also give attention to inflation data, where the flash consumer price index (CPI) in the eurozone may signal deceleration to 1.3 percent in the year through February from a previous of 1.4 percent.

Pound Sterling

This week, the UK will release its final PMI for the services, manufacturing and construction sectors for February. These indicators mainly provide the latest updates on the health of the British economy.

Expectations indicate stability at 53.3 in February, according to analysts' forecasts for the final composite PMI compiling the three sectors. Other than this report, the pound might move according to the general market sentiment.

Commodities

Gold hit a record high last week, benefiting from the panic in financial markets amid the rapid spread of the Corona virus outside China, as well as the decline in the US dollar, but the precious metal dropped significantly at the end of the week in light of profit-taking by investors.

The yellow metal this week will largely depend on the important economic data issued by the major economies. In the event of any signs of global slowdown, this would boost expectations that central banks will reduce interest rates, and thereby this should provide support to gold prices.

With regard to crude oil, prices fell sharply in the past week to record the largest decline in more than four years, as the spread of the Corona virus outside China increased fears of a slowdown in global demand for oil and its products.

Oil price movements this week will depend on the developments of the virus, as well as the weekly US government report tracking the change in crude stockpiles.

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