Investors are eyeing key inflation data and the start of the first-quarter earnings season as U.S. equity futures edge up slightly on Sunday evening. Let’s take a closer look at the latest market developments and economic data reports to determine their potential impact on the market.
Futures tied to the S&P 500 rose 0.2%, and Dow Jones Industrial Average futures edged up 62 points or 0.2%, while Nasdaq 100 futures remained flat. The market’s performance last week was volatile, with the Dow being the only index to post a weekly gain of 0.6%. On the other hand, the S&P 500 and Nasdaq Composite ended lower by 0.1% and 1.1%, respectively.
The March jobs report released on Friday showed that the nonfarm payrolls grew by 236,000 for the month, slightly lower than the Dow Jones estimate of 238,000. The unemployment rate also fell to 3.5%, as expected. However, the data revealed a weakening labor market and the potential of a slow-moving recession unfolding in the U.S. The latest economic data has not resolved the inflation concerns. As such, the odds of another quarter-point rate hike in May should increase as the data does not appear to justify a Fed pause.
Investors can expect a busy week ahead with a flurry of economic data and the start of the first-quarter earnings season. The latest consumer price index and producer price index data will be key in determining if or when the Fed will pause or put an end to its rate-hiking campaign. The first batch of companies reporting their first-quarter financial results will also be released, with Tilray Brands kicking things off on Monday, followed by the major banks – JPMorgan Chase, Wells Fargo, and Citigroup – reporting on Friday.
Today’s Early Market Pair Movement
The US dollar index remained stable at 102.06 on Monday morning.
The EUR/USD currency pair was unchanged at 1.0917.
The GBP/USD currency pair stabilized at 1.2439 after experiencing a three-session fall.
USD/JPY remained at elevated levels above 132.00.
AUD/USD continued to lack upward momentum, trading at 0.6672.
USD/CHF remained subdued at 0.9043.
USD/CAD continued its recent rebound and traded at 1.3505 after Canada’s jobless rate remained steady at 5.0% in March, versus the expected 5.2%.
Bitcoin rebounded and traded above $28,300.
Technical Analysis
EUR/USD (4 Hours)
The EUR/USD pair retreats from its intraday high to 1.0900, although the bulls remain defensive as they look for fresh clues to continue the four-week uptrend in early Monday trading. The pair is reflecting the holiday mood of Easter Monday, as well as anxiety ahead of the top-tier data/events this week. The optimism in the options market for the EUR/USD prices is due to fears surrounding the reserve currency status of the US dollar and relatively more hawkish comments from the European Central Bank (ECB) compared to the Federal Reserve (Fed).
Although the Easter Monday holiday may limit the movements of EUR/USD, the US Consumer Price Index (CPI) data, and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be crucial in providing clear directions for the pair.
From a technical perspective, the current movement of EUR/USD is at 1.0901, which is below the middle band in the Bollinger Band. This suggests there is still a possibility of the EUR/USD moving lower. Additionally, the RSI indicator is at 49, just below the mid-level, which also supports the potential for a lower movement. However, since there is a bank holiday in the EU today, we can expect that there won’t be much movement in the EUR/USD.
XAU/USD (4 Hours)
The price of gold (XAU/USD) initially saw a sharp decline at the opening but managed to recover due to responsive buyers at lower levels. It fell below the psychological support level of $2,000.00 as the chances for another 25-basis point rate hike increased significantly. However, it managed to climb back above the $2,000.00 resistance level. The CME Fedwatch tool shows a sudden increase in the likelihood of a 25-basis point rate hike by more than 65%.
The rock-bottom unemployment rate in the US economy has raised expectations of a consecutive 25 basis point rate hike by the Federal Reserve (Fed). The jobless rate was reported at 3.5% on Friday, which was lower than expected than the previous release of 3.6%. The US Nonfarm Payrolls (NFP) data remained subdued, with the US economy adding slightly fewer jobs in March at 236k than the consensus of 240k.
From a technical perspective, Gold experienced a decline after a strong US jobs report on Friday, which is a typical reaction. Currently, Gold is trading at $1,998, breaking below the $2,000 barrier. Today, some bank holidays may affect the movement of Gold. However, it is expected that Gold will rise today as investors may turn to Gold while waiting for tomorrow’s US inflation data.
