The dollar rises following positive US job data.

The dollar index climbs after the release of the data, with job growth exceeding expectations.

By Raed Alkhedr | @raedalkhedr | 8 December 2023

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  • Oil declines as concerns over supply shortages resurface.

  • The labor market sector adds 199,000 jobs in November.

  • Gold drops to 2015 levels after positive economic data.

NFP data has exceeded expectations.

The US NFP has exceeded expectations, showcasing the resilience of the US economy. In November, the private non-farm sector added more jobs than anticipated, with recent data indicating a rise of 199,000 jobs. This figure surpasses the expected 184,000 and marks an improvement from the previous reading of 150,000 jobs.

On the flip side, wage growth remained steady at a 4% annual rate, with a monthly acceleration of 0.4%. Furthermore, labor force participation increased from 62.7% to 62.8%, while unemployment rates dropped to 3.7%.

Following the release of positive data, the US dollar strengthened against most currencies and commodities, with the dollar index rising by 0.50% to crucial resistance levels at 104.20.

Despite expectations favoring the Federal Reserve keeping interest rates unchanged in the current December meeting, these robust economic indicators, reflecting sectoral strength and growth, might prompt the Fed to dismiss any possibilities of rate cuts in the first quarter of 2024.

Gold was impacted by the positive economic data and the prevailing optimism among investors regarding the pace of monetary tightening in the coming year. The yellow metal dropped to levels not seen since 2015, reaching $2015 per ounce.

Oil is on track for its seventh consecutive weekly loss for the first time in five years.

This comes amidst concerns about an oil supply surplus and weakened demand in China, the world's second-largest economy. Despite a price rebound after the voluntary production cuts by Saudi Arabia and Russia to stabilize markets, fears of a global demand slump and an economic downturn, highlighted by disappointing economic data in several countries, particularly in China, have caused prices to decline again. Data revealed a 9% year-on-year decrease in China's crude oil imports in November.

Saudi Arabia and Russia, the world's largest oil producers, called on all OPEC+ members on Thursday to join an agreement on production cuts for the benefit of the global economy. In their recent meeting, OPEC+ agreed on combined production cuts of 2.2 million barrels per day in the first quarter of the upcoming year. Oil has reached its lowest levels since late June, with Brent and West Texas Intermediate futures heading for a 4.2% and 4.5% decline, respectively, for the consecutive week.