The USD plunged to test 2021 lows, equity markets recovered, Gold rallied and Crypto’s and the Oil market remained volatile but up from lows.
The final week of the month and the trends continue: the Dollar remains weighed at lows, Commodities continue to rally, Equities recovered and Cryptos remain volatile. Data this week has been broadly positive, with good PMIs and record Housing data, while the concern over inflation has cooled, at least for now.
Unemployment remains stubbornly high globally – the weekly US unemployment claims are trending lower, and last week’s 444,000 was another new pandemic era low. This week consensus is for another move lower to 427,000. However, the long-term unemployed data rose and raises questions over the US recovery.
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. The situation in India remains very significant but there are signs of a topping out in new cases.
This week FX volatility continued as the USD moved to test 2021 lows. The USDIndex remained anchored below 90.00 and tested down to 89.49; the 2021 low is 89.16. EURUSD held over 1.2200 to test 1.2266, USDJPY remains capped by 109.00 and Cable rallied to 1.4233, 7 pips shy of the February high at 1.4240.
Global stock markets recovered from the inflation fears spike lower last week as the strong Q1 Earnings Season concludes. The USA500 recovered from last week’s low of 4025, over 4100, and tested back to 4200.
The Gold price continued to rally this week, breaching, breaking, and holding over a key technical resistance at $1875, and rallying to the next resistance zone over $1900 at $1905. The yellow metal opened the month at $1766. The wider commodity rally continues, helped by the weakening USD.
Bitcoin had another big volatile week, following Chinese regulators announcing restrictions on financial companies providing cryptocurrency support. BTCUSD dived to under $30,000, a loss of -54% from 2021 highs, but has since recovered to $40,000.
USOil prices have had a volatile week too, collapsing to $61.50 as speculation of Iranian supply coming back to the market increased and inflation fears spiked. However, the price quickly recovered back over $65.00 as the inflation fears were quelled by more Fedspeak and the Iranian story was complicated by local politics and concerns from the IAEA over the country’s nuclear programme.
The yield on the US 10-Year Treasury Note still holds above the psychological 1.50% level but is below the key support of 1.60%, trading at 1.55% this week, down from last week’s 1.65% and the month high test of 1.70%.
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Stuart Cowell
Head Market Analyst
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