The market's pulse
The SPX500 hit new all-time highs.
The U.S. dollar plunged after April Nonfarm Payrolls.
Gold climbed as the greenback's vulnerability made the yellow metal cheaper.
Oil prices on track for another weekly gain despite the boost in coronavirus cases in India.
Bitcoin failed to reach 60,000 USD and gain a foothold.
Let's take a closer look at how these and other important events affect currency prices, indices, and commodities.
Indices:
MARKET VIEW
Weekly changes: SPX500 +1.04%
The U.S. stock market finished the week in the bullish area after the weak U.S. job data. The report showed U.S. employers hired far fewer workers than expected in April, with nonfarm payrolls increasing by only 266,000 jobs last month after rising by 770,000 in March. It made clear the Fed would carry on with its stimulus policy. The SPX500 was up climbing to its new record at 4,235 USD. On Friday, ten of the 11 major SPX500 sectors were higher in early afternoon trading, with a 1.3% rise in technology stocks. Financials sectors dropped by 0.1%, with interest-rate-sensitive shares of lenders Bank of America (BAC.N), JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N) trading lower. The SPX500 banks sector fell by 0.4%.
On the other hand, Treasury Secretary J.Yellen also noted that "we should not take one month of data as an underlying trend". The investors know that the American economy will be better soon, and jobs will return. That is the main reason why the stocks are on their way up.
KEY POINTS
U.S. job growth unexpectedly slowed in April, likely curbed by shortages of workers and raw materials. The reason might be that enhanced jobless benefits, including a government-funded 300 USD weekly supplement, pay more than most minimum wage jobs. This sparked a heated debate about the generosity of unemployment benefits. Montana and South Carolina are ending government-funded pandemic unemployment benefits for residents next month.
U.S. President Biden reacted to a poor job report by stating that the country's economy had a long way to go. He said he would push another 4 trillion USD investments to help the economy recover. Last week he accomplished a 1.9 trillion USD package to ease the COVID aftermaths.
Most traders are still bullish this year with the stimulus. The Fed is committed to being dovish with the economy reopening due to vaccinations and overall corporate earnings rising.
Currencies:
Weekly changes: EURUSD +1.19%, GBPUSD +1.32%, USDJPY -0.78%, USDCAD -1.37%
The EURUSD climbed to its multi-month peak of 1.2160 following the poor U.S. jobs data.
The GBPUSD pair spent the week fluctuating around 1.391 before rocketing up on Friday above the 1.400. Despite failing to stay at that level, the last time we saw the price in this position was in March 2018.
The USDJPY pair dropped, undermined by the shocking labour market data from the USA. The price stopped at the crucial level of 108.300 before the rebounding.
KEY POINTS
The U.S. dollar fell to its lowest in more than two months on Friday after U.S. jobs data for April came in well below expectations. U.S. interest rates will likely stay at low levels for a long time, which will keep the pressure on the greenback.
The British pound had a mixed week on the foreign exchange market after the Bank of England announced that they would keep the total stock of quantitative easing purchases unchanged, but they would slow down the monthly pace of purchases. The Bank of England also kept interest rates unchanged at 0.10 per cent, as widely expected by most economists. The Bank of England also turned up the hawkish rhetoric and noted that inflation risks to the United Kingdom economy remain broadly balanced. The sterling remained in a cautious mood for much of the trading week as the United Kingdom held a series of local elections, which the Conservative party easily won.
The USDCAD pair rose for the sixth straight week despite the jobs decline in Canada. The employment data for Canada and the United States fell short of estimates, with the USDCAD holding near its most substantial level in 3-1/2 years. Canada lost 207,100 jobs in April as new restrictions to contain a variant-driven third wave of COVID-19 weighed on employers, Statistics Canada data showed. A higher oil price from current levels will be the catalyst for the next leg of Canadian dollar strength.
Gold:
Weekly changes: XAUUSD +3.71%
Gold had its best week since November, rising to 1,850 USD. The rally was caused by a surprise slowdown in U.S. job growth, supporting the case for continued economic stimulus and low-interest rates.
The U.S. dollar weakened with U.S. Treasury yields slide after the labour news, boosting demand for gold as an alternative asset.
KEY POINTS
The inflation expectations drove higher amid a commodities boom, increasing gold's appeal as a hedge. The jobs numbers provide traders with the view that monetary tightening remains distant, further helping precious metal. Technically, if the price stays anywhere above the 1,815 USD level, the next possible target might be the 1,856 USD with the continued surge towards the 1,876 USD.
Important levels: 1,799, 1,815, 1,828, 1,844, and 1,856.
Oil:
Weekly changes: XBRUSD +2.88%
XBRUSD (Brent oil) climbed to 69.50 USD per barrel before declining to the 68.00 level by the end of the week. The oil price range has been widening as far as the COVID situation in India worsened. Nevertheless, the 'black gold' had its second consecutive week in gains.
The EIA reported a U.S. inventory decline of 7.99 million barrels for the week to April 30. The U.S. oil and gas rig count, an early indicator of future output, rose eight to 448 this week, its highest since April 2020, energy services firm Baker Hughes Co said.
KEY POINTS
China's crude oil imports in April fell by 11 per cent, according to energy analytics firm OilX, to 10.41 million BPD. Higher prices are one reason for the expected slowdown in imports as China has already stocked up on cheap crude and can wait for prices to moderate.
The economists believe the upcoming summer driving season will boost the demand for gasoline and keep the oil prices from decline. The European Union said this week it might begin allowing foreign tourists into the Schengen zone starting from June to avoid a second spoiled tourist season. In the U.S., states began to relax movement restrictions as the rates of vaccinated people continued up. Oil prices reflect this news and expectations that travel will soon pick up thanks to mass vaccinations and boost oil demand.
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