Crude oil price remains under pressure in European session with the front-month WTI contract slipping to as low as 76.92. Price has dropped for 5 out of 6 trading days after rising to a 3-month high at 82.97 on August 4. Renewed worries over economic slowdown have weighed on crude oil.
Apart from the US and China, Australia and the Eurozone released soft data today. Australia's employment rate surprisingly rose to 5.3% in July from 5.1% in June despite a bigger-than-expected addition in payrolls (+23.5K vs consensus of 20K). However, June's reading was revised down to 37.4K from 45.9K. The rise in jobless rate was due to increase in participation - more people are entering the job market. Some economists attributed the moderating job market to the rapid policy rate hike. The RBA raised the cash target rate for 6 times from October 2009 to May 2010, taking it to 4.5% from an unprecedented low of 3%.
In the Eurozone, industrial production contracted -0.1% m/m in June, compared with market expectation of a rise of +0.7%, after an upwardly revised +1.1% growth in May. On annual basis, the expansion eased to +8.9% in June from +9.9% in the prior month.
Gold price rebounds after falling for 3 days. Currently trading at 1206, the yellow metal's movement has been constrained by the broad-based decline in the commodity complex. It's obvious that investors have ignored gold's safe-haven status of late. Against the backdrop of increasingly uncertain economic outlook, investors have chosen JPY, USD and bonds as shelters. Japanese yen broke briefly below the 84.82 low made on November 2009 earlier today. While speculations on intervention from Japanese government heightened, it's likely for JPY to appreciate further.
While USD weakened against JPY, it's strong against most growth currencies such as EUR, GBP, AUD, CAD and NZD. As the correlation between gold and USD has returned to negative, firmness in USD also weighed on gold.