April 4th – Daily FX Fundamental Update

Market overview

In today’s market update:

U.S. employment gives hope, and oil inventories drop.

Gold is heading down towards $1,900.

Better than expected NFP

U.S. Unemployment rate is lowest in 2 years

FOREX

EURUSD

The dollar started the week in a solid run as treasury yields rose with expectations of accelerated Fed rate hikes. Meanwhile, talk of bans on Russian gas kept the currencies under pressure. March employment data released last Friday showed the U.S. unemployment rate hitting a two-year low of 3.6%. These results were strong enough that market participants believe it would strengthen the Federal Reserve’s resolve to lift rates sharply.

The common currency has been underperforming due to worries about the economic damage from the war in Ukraine. The European currency has been traded at 1.1047 near its March low of 1.0806. In the same region, the Sterling pound hovered at $1.3155 most of the early session.

USDJPY

The Yen has shrunk back below 122 and last traded at 122.33. The Japanese currency remained solid last week after fluctuating through March on the expectation of higher U.S. interest rates against the Japanese yields.

AUDUSD

The Reserve Bank of Australia will hand down its policy decision on Tuesday in other central bank news. The Australian dollar was traded at $0.7495 and was stable ahead of a central bank meeting on Tuesday, while the Kiwi dipped to $0.6905.

Indices

Last week, U.S. equities closed higher amid the release of the monthly jobs report. The Dow Jones Industrial Average gained 0.4%, and the S&P 500 was up 0.3%, while the NASDAQ Composite was up 0.3%.

The Wall Street major indices closed lower on Thursday, with the blue-chip Dow Jones Industrial Average, the broad-based S&P 500, and the tech-heavy Nasdaq Composite closing down more than 1.5%.

Energy

Oil prices stabilized after the previous session’s sharp losses on the news that the U.S. plans to release one million barrels a day for six months from its emergency reserves (SPR), starting in May. This would be the largest release ever from the U.S. Strategic Petroleum Reserve.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week. At 409.9 million barrels, U.S. crude oil inventories are about 14% below the five-year average for this time of year.

Oil was up on Monday morning in Asia. Market participants consuming nations, while a truce in the Middle East could ease supply concerns.

Brent oil futures were up 0.29% to $104.69, and WTI futures edged 0.12% higher to $99.39. Both Brent and WTI futures fell $1 when markets opened on Monday. Oil prices tumbled about 13% during the previous week after the U.S. announced a plan to sell up to 1 million bpd of oil from the U.S. Strategic Petroleum Reserve (SPR) for six months starting in May 2022.