Spreadex Market Update
Dollar Is King Again Following NFP Fireworks
The US Dollar has seen a strong wave of buying on the back of Friday’s unexpectedly strong US jobs report. The NFP came in at 517k vs 193k expected while the unemployment rate was seen falling back to its lowest level since 1969 at 3.4%. The data come fresh on the back of the FOMC last week which saw the Fed hiking by just 25bps, citing the start of the disinflationary process in the US. However, post-FOMC USD weakness has now evaporated with traders mulling the risk of further hikes this year while US data continues to show resilience.
Key Factors for Today
- USD rallies on back of bumper NFP results
- Equities see mixed actions – US stocks lower amidst USD gains
- USD gains turn EUR lower – G10 FX sees many reversals amidst fresh USD strength
- Metals and oil stabilise following post-NFP sell-off
Coming Up
- GBP – UK Construction PMI
- EUR – Eurozone Retail Sales
- CAD – Ivey PMI
US Stocks Hurt by Bumper Jobs Data
Equities markets were broadly higher across last week owing to softer currency action on the back of the FOMC, BOE and ECB meetings. However, gains in the US have been heavily interrupted by Friday’s bumper jobs report. Elsewhere, asset prices in Europe remain propped up owing to a sharp reversal lower in EUR as traders eye the prospect of the ECB slowing down or pausing rate hikes beyond the next meeting in March.
US Earnings Continue Following Big Tech Misses Last Week
US earnings season gets back underway today with Activision and Pinterest among the big names reporting. The tail end of last week saw warnings taking a turn for the worst with misses from the likes of Apple, Amazon and Alphabet. One of the key takeaways from last week’s slew of earnings was the uncertainty and downside risks being cited in the outlook being cited by many CEO’s. However, the strength of Friday’s US jobs data now suggests that the US economy is in better health than many believed.
USD Rally Turns EUR Lower
The resurgence in USD has upset the playing field across FX markets. The post-NFP rally in the Dollar has seen heavy reversals lower across the board with EUR among the currencies worst hit. The post-ECB decline in EUR has been exacerbated by fresh strength in USD and looks likely to mark a near-term pivot for EURUSD. NZD has also been hard hit by the fresh buying we’ve seen in USD.
Metals & Oil Stabilise Following Sell-Off
In the metals and commodities space, both gold and silver saw heavy selling pressure on the back of Friday’s jobs report. However, declines in both metals have stalled today with fresh buying seeing both in the green across the European open. Crude prices have seen similar action to the moves we’ve seen in metals. Futures prices fell sharply on Friday, extending losses from earlier in the week before stabilising somewhat today. Further losses remain a risk, however, on the back of the selling we saw last week.
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