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Russia’s military forces stepped up attacks on frontline cities in eastern Ukraine. Despite the continued geopolitical concerns, the safe-haven US dollar index fell this morning.
Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment rose by 9.4% in April to its strongest level since June 2022 of 85.8. The news lent support to the AUD/USD forex pair.
Korea’s central bank maintained its base rate at 3.5% at its April meeting, which sent the KRW/USD pair higher in forex trading this morning.
UK’s retail sales grew 4.9% year-over-year in March, above market estimates of 4.2% growth, lending support to the GBP/USD forex pair.
China’s annual inflation rate came in at 0.7% for March, versus February’s reading and market expectations of 1.0%. Despite this, the CNY/USD pair moved slightly lower in forex trading this morning.
What’s happening: The US dollar began the new week on a positive note, recovering some of the losses made last week.
What happened: The US Labor Department released its nonfarm payrolls (NFP) report for March on Friday, which showed lower job adds than market projections.
Traders also responded to economic data released on Monday, after the long Easter weekend.
Why it matters: US employers maintained an upbeat pace of hiring, adding 236,000 jobs in March. Although this marked the lowest pace of job growth since December 2020 and came in below market expectations of 239,000, it still pointed towards continued strength in the US labour market.
The unemployment rate in the country eased to 3.5% in March and came in better than market expectations of 3.6%. The number of unemployed people declined by 97,000 to 5.839 million, and employment levels rose by 577,000 to 160.892 million during the month.
Average hourly earnings grew by 0.3% to $33.18 in March, in-line with expectations, after rising 0.2% in the previous month.
The latest jobs data increased speculations of the US Federal Reserve hiking its benchmark interest rate at next month’s policy meeting, which lent support to the US dollar.
In other economic reports, US wholesale inventories grew by 0.1% in February, compared to the preliminary reading of 0.2%. This followed the 0.6% decline in the previous month.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to 102.58 on Monday.
The JPY/USD forex pair declined by more than 1% on Monday, after Japan’s new central bank governor Kazuo Ueda signalling no major changes to the bank’s monetary policy. The EUR/USD pair fell around 0.4% to 1.0861.
What to watch: Traders await the release of inflation data from the US on Wednesday, which will give more insight into the Fed’s next tightening move. Analysts expect headline inflation to increase by 0.3% and core inflation to rise by 0.4% in March.
Context: Oil prices edged lower on Monday, after recording gains for three weeks in a row.
Details: Crude oil prices added more than 6% last week after the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) announced an unexpected round of production cuts beginning May.
The OPEC+ announced plans to cut output by 1.16 million bpd (barrels per day) from May to yearend. Saudi Arabia also increased its May crude prices to term customers in the US and Asia.
Oil prices also received support from a steeper-than-projected decline in US crude inventories last week.
However, traders became cautious on Monday on prospects of further rate hikes by central banks, which could cloud the global growth outlook and impact oil demand.
The US dollar moved higher after the latest NFP (nonfarm payrolls) report signalled a strong labour market, increasing expectations of another rate hike by the Federal Reserve. The strength in the US dollar exerts pressure on oil demand, as it makes it more expensive for foreign currency holders.
Brent crude for June delivery fell 94 cents to close at $84.18 per barrel on Monday, after shedding around $1 earlier in the session. WTI crude oil for May delivery declined by 96 cents to settle at $79.74 per barrel.
In other energy trading, wholesale gasoline for May delivery declined less than 1 cent to reach $2.81 a gallon, while May heating oil added 2 cents to $2.68 a gallon and May natural gas gained 16 cents to $2.17 per 1,000 cubic feet.
What are expectations: Traders await the API’s data on crude oil stockpiles today. US crude inventories had contracted by 4.3 million barrels in the week ended March 31, after a decline of 6 million barrels in the prior week.
Markets also will keep an eye on monthly reports from the OPEC, due to be released on Thursday, as well as the IEA (International Energy Agency) report, scheduled for release on Friday.
Other Markets: US trading indices closed mixed on Monday, with the Dow Jones index and S&P 500 up by 0.30% and 0.10%, respectively, and the Nasdaq 100 down by 0.09%.
| Technical Levels | News Sentiment |
| EUR/USD – 1.0871 and 1.0883 | Positive |
| USD/CHF – 0.9079 and 0.9088 | Positive |
| Silver – 24.980 and 25.037 | Positive |
| Natural Gas – 2.165 and 2.171 | Negative |
| Dow Jones – 33525.38 and 33608.07 | Positive |
| Futures at 0400 (GMT) | ||
| EUR/USD (1.0885, 0.22%) | Dow ($33,809, 0.17%) | Brent ($84.66, 0.6%) |
| GBP/USD (1.2405, 0.17%) | S&P500 ($4,143, 0.17%) | WTI ($80.21, 0.6%) |
| USD/JPY (133.41, -0.15%) | Nasdaq ($13,170, 0.09%) | Gold ($2,011, 0.4%) |
South Africa’s foreign exchange reserves and industrial production, Japan’s machine tool orders, Turkey’s industrial production, Eurozone’s retail trade, US NFIB small business optimism index and Redbook Index, Brazil’s consumer price inflation, Mexico’s industrial production, Russia’s current account, as well as China’s Total vehicle sales, new yuan loans, outstanding yuan loan growth, total social financing and money supply M2.
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