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ABC Bullion

MKS Group - Europe/US Market Update - 4th July

04 July 2014


MACRO:

- The highly anticipated US Nonfarm Payrolls didn't disappoint overnight,
exceeding expectations to print 288k in June (exp 215K) and in addition the
previous two months were revised up by a combined 29K. Furthermore the
unemployment rate dropped to 6.1% from 6.3%, it's lowest level since
September 2008.
- Initial jobless claims were generally in line with expectations as were
continuing claims, while the ISM Manufacturing Index dipped slightly to
56.0 from 56.3, however still expansionary.
- US Stocks gained on the back of the positive data releases with the DJIA
putting on +0.54%, breaking through 17,000 in intraday trade and the S&P
gained +0.55%.
- The ECB kept rates unchanged overnight as they wait for recent stimulus
measures to take hold amongst continuing weak inflation. The ECB also
announced that commencing January 2015 they would hold rate setting
meetings once every 6 weeks rather than monthly.
- European Stock markets performed strongly on Thursday, buoyed by the
announcements out of the ECB meeting and strong US data. The German Dax
surged +1.19% to set a new record high, while the UK FTSE added +0.72% and
FTSEurofirst 300 closed +0.95% higher.
- In currencies USD strength was the general theme. The EUR was the hardest
hit following the US Payroll release, dropping from 1.3650 to around
1.3600, closing just above the low print.

PRECIOUS:

- Following a weak Asian session gold continued to be under pressure in
Europe leading into the US data releases, the weakness largely driven by
profit taking ahead of the payrolls. The strong US NFP print sent the
yellow metal to the session low of USD $1,310 before a sharp recovery
lifted the price to pre data release levels, underlining the current
strength in demand for gold.
- Silver drifted lower in Europe and followed gold to print the session low
on the back of the US payroll figure. The drop was short lived however and
the grey metal spiked higher to close unchanged for the session.
- Platinum was softer on Thursday following it's recent strength as
investors took profits around USD $1,500. Palladium outperformed the other
precious metals to gain nearly 1% on supply concerns as US auto sales look
headed for their biggest year since 2007.

PRE-ASIA COMMENTS:

- The US is on holiday today so we are expecting limited price action
leading into the weekend.
- German Factory Orders are released tonight.