The US nonfarm productivity dropped less sharply than previously was forecasted in the first quarter, however labour-related costs still are high since companies employed more workers in order to boost output. According, to the Labour Department, productivity which measures hourly output per worker, contracted at an annualized rate of 0.6% versus the 1.0% pace reported in May. It is worth to point out, that revision is in line with economists' expectations. The unit labour costs also jumped to 4.5% versus an expected unchanged at 4.1%. Meanwhile, weak productivity partially explains the divergence between the economy's performance at the beginning of the year and relatively strong labour market, marked by average monthly job gains of 196,000 in the first quarter. In the meantime, productivity has only advanced in two of the last six quarters and it went up at a 0.7% rate compared to the first quarter of 2015. By the way, some economists tried to explain weak productivity referring to the changing industry mix, which has experienced a shift from manufacturing and energy toward the production of services. Productivity accelerated at an annual rate of less than 1% in each of the last five years, suggesting the economy's potential rate of growth has losing momentum.
The Reserve Bank of Australia decided not to change interest rates and left at 1.75% level at the conclusion of its June monetary policy meeting. Such outcome was widely expected by financial economists. Meanwhile, recent outstanding economic data including gross domestic product, which expanded 1.1% in the first quarter of this year is suggesting economic growth and but inflation was weak and expected to remain so for some time due to low wages growth and cost pressures. The Australian dollar, in turn, accelerated on Tuesday after the Reserve Bank of Australia kept interest rates on hold. Concerning the RBA Governor press conference, Mr Stevens was no in mood to talk about interest rates. It was the briefest statement in six months from the governor of the Reserve Bank. It is not an easy thing to read too much into this statement, but it is still clear that the RBA is going to do nothing until it gets a better reading on what it sees as the three main issues of the day. In a statement, Reserve Bank governor Glenn Stevens highlighted while the global economy is continuing to expand, it was doing so at a lower-than-average pace. "In Australia, recent data suggests overall growth is continuing, despite a very large decline in business investment. Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend," he added.
Upcoming fundamentals: UK production, US JOLTS Job openings and crude oil inventories
Gold surges to 1,249 on Tuesday
Daily chart: The bullion broke the resistance put up by 55-day simple moving average at 1,244.60 and booked gains on Tuesday. The yellow metal started day's trading at 1,243.85 and touched the 1,249.15 level. At the moment, gold is trading at 1,248.34 against the US Dollar. In the meantime, the metal faces no resistance up to the level of 1,259.11, where the weekly R1 is located. On the other hand, the bullion might fall and reach the monthly PP at 1,239.18. In addition, the aggregate technical indicators support a downward move, as they forecast a fall for gold today.SWFX market sentiment stays bullish on Wednesday
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,275 by the end of August
Traders who were asked regarding their longer-term views on gold between May 8 and June 8 expect, on average, to see the metal around 1,275 by the end of August. Generally, 57% (-1%) of participants believe the price will be generally above 1,250 in ninety days. Alongside, 36% (+3%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months.