Forex
Source: Bloomberg. Click to see full size
After a shaky start to the week, the US dollar rose on the jobs data as the unemployment rate fell to a two-year low and wages accelerated once again.
The US economy added 431k jobs, which was less than the expected 490k and the previous print of 750k. However, the record low unemployment rate at 3.6% cushioned the greenback.
With the US dollar gaining momentum, the EUR/USD fell further and reached a new three-day low at the $1.1020 level during the American session. Moreover, an increase in the Euro unemployment rate led to a decent sell-off of the EUR/USD. The Eurostat reported the unemployment rate at 6.8%, which remained in between the mid-market consensus at 6.7% and the prior figure of 6.9%. At the same time, traders increased bets that the European Central Bank (ECB) would raise interest rates after rising inflation numbers.
Last week was a bumpy ride for EUR/USD. Since it was recovering from the previous week’s lows, it fell towards the end and closed the week just above its support at 38.2% retracement at the $1.1035 level. If it continues to fall lower, the next support will be at 23.6% retracement at the $1.1005 level.
Despite the absence of a new trigger, GBP/USD continued to trade flat around the $1.3100 level. For now, traders are waiting for Gov. Andrew Bailey’s speech to learn more about what the Bank of England will do with its monetary policy in May.
USD/JPY recovered after dipping 350-pips in the week, rallying above the ¥122.00 mark on a buoyant market mood as peace talks between Russia and Ukraine developed further, and US macroeconomic data lifted the US dollar.
This week, traders eagerly await the FOMC meeting minutes on Wednesday, 6 April 2022, since it will be the first meeting following the interest rate hike in March.
Commodities
Source: Bloomberg. Click to see full size
At the start of the week, gold lost a lot of ground due to rising US Treasury bond yields but recovered by the middle of the week. However, with the greenback gaining momentum ahead of the weekend, XAU/USD could not maintain its gains and closed the week with losses.
The release of the US monthly jobs report on Friday, 1 April 2022, reinforced market expectations that the Fed would adopt a more aggressive policy stance to combat persistently high inflation. As a result, the yield on the two-year US government bond, which is highly sensitive to rate hike expectations, reached a three-year high, dragging down the non-yielding yellow metal at the end of the week.
As per the hourly chart for the week, we see the price fluctuating near the 38.2% – 61.8% retracement levels at around the $1,920 and $1,934 mark. Gold ended the week at around $1,925, just below the 50% retracement level, which is also acting as the current resistance level. If gold finds an uptrend, its next resistance level would be at the 61.8% retracement level, and if it continues to trend downwards, its next support level would be the 23.6% retracement level at around $1,911.
The FOMC minutes this week may impact the market pricing of Fed rate hikes. If policymakers are willing to keep raising the policy rate aggressively in the coming sessions, US Treasury bond yields may continue to rise, putting pressure on gold.
Oil was down by around -6.30% for the week, extending its losses from Thursday, 31 March 2022, when President Joe Biden authorised the release of 1 million barrels of oil per day from the US Strategic Petroleum Reserve for the next 6 months – the largest release ever.
Additionally, members of the International Energy Agency (IEA), which includes the United States, most of Europe, Canada, Mexico, Japan, and South Korea, announced on Friday, 1 April 2022, that they have decided to release oil from their emergency stockpiles to support the United States’ decision. The IEA intends to provide more information about the release early this week.
Although the move may keep prices under control in the short term, it should be viewed as only a temporary fix for tight global supplies, especially as the war in Ukraine continues.
Cryptocurrencies
Source: Bloomberg. Click to see full size
Bitcoin was able to break through a key resistance level last week that had kept it within the same trading range since the beginning of the year. The world’s largest cryptocurrency by market capitalisation surged to a three-month high on Tuesday, 29 March 2022, reaching above $48,000 during a bullish overnight run.
These recovered gains for Bitcoin follow a recent price rally that saw the digital asset rise by more than $10,000 in the previous 2 weeks. Since then, Bitcoin settled from Tuesday’s highs to consolidate around the $45,000 mark. As of 18:30 Friday 1 April 2022 UTC, Bitcoin was trading at around $46,390.
At the time of writing, Bitcoin is currently trading at around the $46,392 mark. Its primary support level is around $46,194 at the 50% retracement level, followed by its secondary support level of 45,769 at 32.8% retracement. An additional upward price momentum would test Bitcoin’s first resistance level of $46,618, and a breach would bring the $47,143 level into account.
It is the first time Bitcoin has hit this mark since December 2021 and provides renewed optimism that a longer-term bull market could be forming. Analysts have attributed the cryptocurrency price rally to the bullish trends formulated throughout March, such as the dwindling supply of Bitcoin on crypto exchanges and rumours of other countries following Al Salvador’s move to adopt Bitcoin as legal tender.
Furthermore, other altcoins mirrored Bitcoin’s gains with Ether, Cardano and Solana’s price momentum helping to push the overall crypto market capitalisation above the $2 trillion mark.
US Indices
|
Name of the index |
Friday’s close |
*Net Change |
*Net Change (%) |
|
Dow Jones Industrial (Wall Street 30) |
$34,818.27 |
-137.62 |
-0.39% |
|
Nasdaq (US Tech 100) |
$14,861.21 |
-126.19 |
-0.84% |
|
S&P 500 (US 500) |
$4,545.86 |
-29.66 |
-0.65% |
Source: Bloomberg
*Net change and net change % are based on the weekly closing price change from Monday to Friday.
Last week, stocks performed modestly as traders assessed a rocky first trading quarter and an unnerving recession indicator from the bond markets.
The Dow Jones Industrial Average traded lower at around $34,818, whilst the S&P 500 dipped by 0.65% to close around $4,545. Meanwhile, the Nasdaq Composite posted a -0.84% loss on the week. On the whole, stocks closed on Friday 1 April 2022 around session highs.
Despite a strong performance in March, Wall Street witnessed its first negative quarter in over 2 years and traders are now assessing what quarter 2 will bring for the markets.
Most notably, a significant part of the US Treasury yield curve inverted briefly on Friday, 1 April 2022. For the first time since 2019, the spread between the 2-year and 10-year yields varied multiple times last week. This rare phenomenon has come to be known as the prelude to a recession, with each of the last 8 recessions since 1969 being preceded by a yield curve inversion.
On Friday, 1 April 2022, the yield on the 10-year note closed at 2.38%, 6 basis points below the 2-year treasury note, which was at 2.44%.
Market players also assessed the latest figures from the US Labor Department’s monthly jobs report, which shows the strength of the jobs market across the US economy. The report showed that employers added 431,000 jobs in March, well below the Bloomberg consensus estimates of 490,000.
While the latest figures indicate a slowdown from February’s 678,000 gain, the March jobs report marked a sustained increase above pre-pandemic levels, contributing to expectations of aggressive monetary policy action from the Federal Reserve in the coming months.
For the week ahead, the market focus should remain directly on developments around the Ukraine-Russia conflict and the Federal Reserve, which is scheduled to release the minutes of its March meeting on Wednesday, 6 April 2022.
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