US stock markets crashed as fear controlled the market over global economic concerns and weak domestic data. The market feel sharply after weak jobs data hit the market but the market was already sliding/weak. It was the worst day in 6-months providing market contagion concerns.
Crude oil also came crashing down with equites but the gold commodity went opposite to oil suggesting there is a great amount of fear to currencies and the looming fed meeting which could signal more injections via quantitive easing speculations to prop the economy/stock market.
U.S. nonfarm payrolls and jobs data were the key concerns in US markets which turned out to have a negative influence on the market. The Labor Department said 69,000 jobs were created during May, the smallest increase in a year and well short of economists’ forecasts. The unemployment rate rose to 8.2 percent from 8.1 percent in April, the first increase in 11 months. Analysts had expected U.S. non-farm payrolls to rise 150K last month. The data provided evidence that the economy is still deteriorating.
The drop in equities is particularly concerning in that it wipes out yearly gains.
Gold may be providing a safe haven to investors with uncertainty (if not out right fear) in the cash markets.
Unemployment in the euro zone has reached 11% in April and March, the highest since the data started in 1995.
The EUR/USD finished it's last hours of the trading week with a dramatic bounce during the US close from the 1.2280's but the 2010 June low (1.1870's) has yet to be tested. If the US props the market or Euro confidence is restored we might not see this low.
European sovereign debt crisis continued to be a shadow of every market fall with Greece and Spain on the forefront of EU woes to haunt the Euro lower - just when you think they are out of the news they come back in with more gloom.
Greece will elect a new government this month. Coupled with the FOMC meeting in the US it could lead to some very difficult and perhaps a turbulent month if issues are not resolved regarding European unity and the health of the US economy.
Crude oil ended the week down 8% coupled with weak global data out of US, China, and Europe falling in tandem.
Neal Vanderstelt - Currency Analyst
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