- Silver prices fluctuated after the NFP figures, but have changed little from pre-data levels in the $ 22.20 zone.
- Increases in employment in the United States disappointed expectations.
Silver prices (XAG / USD) have experienced a confused and two-way reaction to the latest US labor market report The price fell below $ 22.00 but have since rallied back in line with pre-data levels near $ 22.20 after touch session highs just below $ 22.30. For reference, job gains in the headlines in the US disappointed, but other indices showed that the US labor market continued to move toward full employment “in the short term.” As such, the money market implied the probability that the Fed would raise interest rates by 25 basis points in March and it moved slightly higher to 90% from 80% before the launch.
Given the mixed nature of the report and as traders continue to absorb what it means for the Fed’s policy outlook, the currency and bond markets have not moved much. If anything, the dollar is a bit weaker, with the DXY currently testing the 96.00 level. Meanwhile, US 5- and 10-year TIPS (real) returns remain lateralized in the respective areas of -1.34% and -0.77%, roughly in line with pre-data levels. From a correlation standpoint, it makes sense that the data hasn’t had much of a follow-up for precious metals yet either.
While silver appears to have emerged unscathed following the NFP figures (to the surprise of some), it may be too early for the bulls to declare an end to this week’s selling pressure, given that three Fed members will be speaking during the course of the afternoon. The tone of his remarks is likely to echo the aggressive minutes, and FOMC participants seem to agree on most aspects of monetary policy. Bond yields have risen sharply on the week to trade in a more aggressive Fed and, at current levels, the XAG / USD is expected to end the week almost 5.0% lower. Perhaps that limits the scope of further losses. Otherwise, a break below $ 22.00 would open the door to a test of the December lows around $ 21.40.
Technical levels
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