[Market Review].
This week’s trading market trend is quite reversed, the U.S. bond yields and the dollar index rose and then fell, while Gold and silver and non-U.S. currencies are the opposite, earlier under pressure to the downside, and then recovered previously lost ground. In the oil market, this week’s multi-short factors, oil prices into a wide range of oscillations, we come together to look at the specific next.
Ten-year U.S. bond yields rose and then fell. This week, the market is hot topic than the U.S. President Biden‘s $2 trillion infrastructure plan. Biden said that the infrastructure plan includes both jobs and households and will create millions of jobs.
On the issue of tax increases, Biden pointed out that the tax rate for people earning less than $400,000 a year will not increase. Investors expect Biden’s infrastructure plan to make the market more nervous about inflationary concerns. The U.S. 10-year Treasury yield once stood above 1.77%.
On the issue of U.S. bond yields, this week’s statement from Fed officials was roughly the same as before, happy to see Inflation slightly above 2% for a period of Time and would not express undue concern about rising U.S. bond yields.
In terms of economic data, this week’s releases were mixed, with U.S. PMI data and challenger business layoffs performing favorably, though ADP data and initial jobless claims were slightly underwhelming, and we can keep an eye on tonight’s non-farm payrolls report to determine further direction.
The dollar index gave back its gains. Overall, there is no particular shift in fundamental factors compared to before, and the outlook for the US economic recovery remains on the optimistic side.
The downside in U.S. bond yields and the dollar index cannot be ruled out as a result of position adjustments ahead of the holidays. The dollar, which performed well in the first quarter, may have faced some profit-taking, while U.S. bonds, which performed poorly in the first quarter, may have welcomed some short-covering, pushing up U.S. bond prices and thus bringing yields down.
Gold recovered lost ground. Gold was boosted by a shocking decline in U.S. bond yields and the dollar in the latter part of the week. Gold rallied from a low of $1,677 to near $1,730.
Silver rallied from its lows. Silver is moving in a roughly similar fashion to gold. Earlier in the week, silver prices slid to near $23.7, then saw a rebound and is now running near $25.
The euro was depressed before rising. Let’s look at non-U.S. currencies again. This week, the euro was trapped by blockade measures in France, Italy and other countries, and once narrowly broke the 1.17 handle. As the dollar retreated, the euro also regained its previous lost ground.
The British pound returned above 1.38. The British pound also fell and then rose, although the fluctuations were not as large as those of the euro. The British vaccination schedule is far ahead of other countries and continues to support the pound.
OPEC+ agreed to return to a phased monthly production increase. Finally, a look at the oil market. This week, Crude Oil faced two major negative factors: first, European embargo measures exacerbated demand concerns; second, OPEC+ agreed to return to a phased monthly production increase.
The OPEC+ ministerial meeting came to an end with oil producers agreeing to increase production by 350,000 barrels per day in May and June, respectively, and by 450,000 barrels per day in July. Saudi Arabia is gradually withdrawing its voluntary production cut of 1 million barrels per day within the next three months. The next Joint Ministerial Oversight Committee and OPEC+ ministerial meeting, will be held on April 28.
Although OPEC+ broke expectations of no production increase, gradually increasing oil supply, which is considered insufficient to meet the growing demand, so oil prices fell and then rose overnight and recorded the biggest one-day gain in almost a week.
Risk Warning
U.S. dollar: the U.S. index high encountered resistance to focus on the 93 mark
Fxstreet analysts pointed out that the rally of the dollar index, seems to be blocked at 93.5. The U.S. index needs to break through 93 to continue its upward movement. If this range is broken, the next target is the high of 94.25-94.30 from last November. in addition, after the recent breakout of the 200-day moving average of 92.48, the downside pressure on the U.S. index has eased, and if it can continue above this level, the near-term outlook for the U.S. index remains bullish.
Euro: Institutions bearish on the euro European and American concerns 1.17
OCBC Bank said that France will enter a four-week national blockade, while Italy will enter a few days of more stringent restrictions around Easter. Against this backdrop, the bank is bearish on EURUSD, with the exchange rate attempting to bottom at 1.1704 and the subsequent rally blocked at 1.1750-1.1760.
Silver: Silver average price is expected to be 29.29, boosted by industrial demand
The recent performance of the U.S. dollar and U.S. Treasury yields has put the entire precious metals market under pressure, with both gold and silver prices underperforming. However, Bank of America’s latest report concluded that the silver market will be boosted by demand from industrial manufacturing, with the average silver price expected to be $29.29 per ounce this year.
Key Forecast
20:30 U.S. non-farm payrolls data may have a bright performance
First, to focus on the United States will be released in March non-farm payrolls, February U.S. non-farm payrolls increased by 379,000 people, the unemployment rate fell to 6.2%.
On Wednesday, the ADP employment data, known as small non-farm payrolls, was released, recording 517,000 people, a record high increase since September last year, with the previous value revised upward to 176,000.
ADP chief economist commented that there was a significant improvement in the labor market data in March, with job growth in the service sector significantly exceeding the recent monthly average, with the most significant job growth in the leisure and hospitality sector. The job market continues to recover slowly across the board, with the impact of the Epidemic on large firms gradually emerging, while job growth in the goods manufacturing sector stagnated. With the epidemic still dominating, the service sector remains well below pre-epidemic levels. However, these sectors are likely to be the biggest beneficiaries as the opening time progresses and consumer confidence strengthens.
Currently, the market expects that U.S. non-farm payrolls may increase by 647,000 in March, with an unemployment rate of 6%.
Reuters believes that the U.S. private sector increased hiring in March as more Americans were vaccinated with the new crown, pushing the economy toward a wider reopening, which is expected to unleash a wave of pent-up demand in the coming months and the U.S. labor market will gradually recover, with the dollar index expected to gain support.
23:00 Bostick may be optimistic about job recovery
Next, take a look at Bostic’s upcoming speech. Earlier, Powell expects upward pressure on prices in the near term, but the pressure is temporary and the Fed is committed to maintaining inflation at an average of 2%; he sees rising bond yields as a reflection of an improving economic outlook, and growth should be very strong in 2021. As the economic recovery and goals make substantial progress, the Fed will reduce bond purchases. His attitude toward bond purchases was unexpected by the market, as he had previously said he would maintain bond purchases, and only shifted his tone in his last speech.
And Bostic also said on Wednesday, the United States is expected to see “a lot” of employment figures in the next few months, the Fed is not expected to make too much reaction to bond yields. In summary, Bostic is expected to remain optimistic about the job market recovery, and is not worried about inflation and bond yields temporarily higher. His stance is not expected to exceed market expectations, so just keep an eye on it.
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