US-China Phase One Deal in Focus for the Week.

US-China Phase One Deal in Focus for the Week.

US-China Phase One Deal in Focus for the Week.


Last week, the US – Iran conflict on the killing of Major Gen. Suleimani Attracted a lot of attention and created great volatility in the crude oil market with the view of the escalation in the conflict. Some more conciliatory comments from Trump have taken the US-Iran conflict more or less away from the financial agenda, seeing the ‘modest’ Iranian response. Details form DANSKE have it that Iranian protesters as was the case before the killing – are now once against turning their anger against the Iranian leadership after it has admitted that the military shot down the Ukrainian aircraft by mistake.

 

The oil price is now USD65 a barrel (Brent), which is below the level before the killing of Suleimani. More details of the fundamentals on Friday, the US labor market report for December Non-farm payrolls came out at 145,000 persons compared to the 166,000-consensus estimate. The November figure was revised lower by 10,000 to 256,000 persons. Overall a weak report is relative to market expectations. However, job growth remains above labor supply growth. Hence, it was still strong enough for the labor market to continue to tighten.

 

Other indicators like the unemployment rate were unchanged at 3.5% but noteworthy ‘underemployment’ fell from 6.9% to 6.7%. We see this measure as a better slack gauge than the actual unemployment rate. Finally, wage growth came in weaker in December at 0.1% m/m and the annual growth rate eased from 3.1% to 2.9%. It seems that wage growth has peaked. We now concentrate on the Phase-1 deal Of the US-China trade war settlement to be officially signed on Wednesday the week.

 

In the UK we have the monthly GDP estimate for November, which will be decisive for whether the BoE will cut the policy rate later this month, which is our base case. We think this may lead to further GBP weakness, as it is not yet priced in. Today we have seen GBP/USD extending its downfall to 1.2960 is the lowest so far this year but we look to see how the BoE report on rate cut affects the weakness of the market.

 

 

-Moses Kayode.

-Derivative Analyst.

 

-Winsala Gbotemi.

-Financial Staff Writer.

 

Eagle Global Markets.

 

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