The USD plunged to new 3-mth lows, gold tested January highs, equity markets slipped and Crypto’s got a double whammy.
The focus of attention this week has been the big spike for US CPI and weak Retail Sales, this coupled with the huge miss for NFP has continued the pressure on the USD and Equity markets as the rally in the commodity markets continues. Cryptos suffered a price crash, thanks to Musk & Chinese regulators. FOMC minutes later today, and more inflation data & PMIs still to come this week.
Unemployment remains stubbornly high globally – was the NFP shock a one-month blip? Or sign of more weakness to come? Last week’s US unemployment claims beat expectations again at 473,000 for a new pandemic era low. This week consensus is for another move lower to 450,000.
The vaccine rollouts continue to drive sentiment, but the virus variants remain significant. The US and UK lead the high-income countries’ rollouts, and the EU and Japan are starting to gain momentum, as lockdowns ease. However, the situation in India remains very significant.
This week FX volatility continued as the USD moved to new 3-month lows. The USDIndex fell below 90.00 again and tested down to 89.65. EURUSD moved over 1.2200 to test 1.2245, USDJPY remains capped by 109.00 and Cable rallied significantly over 1.4200 to 1.4220 and tested February highs at 1.4240.
Global stock markets retraced again as inflation fears once again arose and the strong Q1 Earnings Season (87% of companies have beat expectations) began to be discounted. The strong earnings story continued however, from key retailers Walmart, Home Depot and Target. The USA500 tested 4025 lows and remains under 4100.
The Gold price continued to rally this week, testing a key technical resistance at $1875, for the first time since January. The yellow metal opened the month at $1766. Zinc hit a 13-year high, and Palladium, Lumber and Copper remain well bid, as the commodity rally continues, helped by the weakening USD.
Bitcoin had a big week, initiated by tweets from Elon Musk confirming that Tesla will now NOT accept BTC as payment for vehicles and sparking a frenzy that the company was selling its $1.5bln investment, something that was later denied. Further pressure came after Chinese regulators announced restrictions on financial companies providing cryptocurrency support. BTCUSD dived to under $35,000.
USOil prices have held over $65.00 a barrel this week having tested a 2-month high last week, buoyed by the wider commodity rally and weaker USD, but concerns over inflation and the global recovery remain headwinds.
The yield on the US 10-Year Treasury Note holds above the psychological 1.50% level and is back over the key support of 1.60%, trading as high as 1.65% this week, but down from last week’s test of 1.70%.
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Stuart Cowell
Head Market Analyst
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