Week Ahead of March 28

After the initial freight, markets are seemingly adjusting more rationally to a difficult fight against rising inflation and a stand-off with Russia.

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Week in review

Popular headlines were dominated by worries of an escalation in the Russia-Ukraine conflict as the G7 and NATO convened to uncover more measures to punish Russia. But behind the scenes, markets stabilized and the Nasdaq lead a rally across stock indices as investors adjusted to the reality that the current uncertainty could be here for the long haul. 

More central banks raised rates, as inflation continued to rise in major economies. The lone exception is Japan, where the BOJ continues to pledge accommodation as the country sees limited price increases. USDJPY reached a 6 ½ year high at ¥122.50, where it saw a rejection. ¥121.00 is now a support. 

The Russian stock market finally reopened, but traders were banned from selling, with only the government buying state-backed shares to prop up the index. Russia also demanded that European buyers of crude pay in rubles. EUR/RUB fell 20% as a result on Friday alone. €100 is the next major support, whereas on the upside resistance lies on Friday’s open near €132.

Meanwhile, bond yields continued to rise as analysts pointed to slack liquidity in fixed income ahead of the end of the quarter. The US 10-year yield soared higher, revisiting 2.40% after three years.

The week ahead

Global PMIs in the spotlight

Next week is expected to start somewhat quiet on the data front, but then build to an avalanche of data right before the weekend. China's National Bureau of Statistics publishes its version of Manufacturing PMI on Thursday, then Caixin does the same on Friday. Later in the day, it's the Eurozone's turn for final PMIs, followed by US ISM Manufacturing PMI. 

EUR/USD resistance lies at $1.1050; support at $1.0950.

US jobs market expected to slow

What's likely to get the most attention for the week will be NFP also on Friday. Last week's initial jobless claims came in at a historic low, which could be a sign of an improving labor market in the US. Even so, analysts are so far expecting a lower number of jobs created than last month at just over 400K compared to 678K prior. 

The SP500 could react. Major levels can be observed at 4588 and 4420.

OPEC and oil situation

After NATO and the G7 declined to add more sanctions last week, the oil market appeared to be a little more certain. That came after reported storm damage in the Black Sea rendered oil shipments from Kazakhstan inoperable for months, removing as much as a million barrels per day from global supply. OPEC+ will have its monthly meeting on Wednesday with renewed pressure to raise production, but the consensus remains that the cartel will stick to its agreed slow increase in production despite high prices. 

WTI crude made a weekly high at $118/bbl, which is next week’s support. Inversely, support can be seen at $108/bbl.

Other data that could move the market

On Tuesday, GfK announces Consumer Confidence data from Germany, and then in the US session JOLTS, job openings could move market sentiment. On Wednesday again Germany could move the markets with the latest inflation data, followed the next day with retail sales data and unemployment data from the Eurozone’s largest economy.