10/5/2021

 

DISAPPOINTING RESULTS IN THE US LABOR MARKET

 

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Weekly Report: Indices, Commodities, Currencies, and Cryptos

 

General Comment

Last week closed with a negative surprise. Analysts had expected around one million new jobs in the US in April, but the announcement was disappointing: just 266K, with unemployment climbing to 6.1% from 5.8% expected by markets. This fact confirms the attitude of the FED, which has repeatedly stressed that low Interest Rates will remain in place for some time until things change.
Jerome Powell was reassuring about Inflation, stressing that any increase would be temporary. The dollar fell, especially on Friday, as bond yields also declined. In contrast, Stock Markets were bullish in Europe and the US, except for the NASDAQ100 as there are still issues in the technology sector.
In Europe, however, the announcements of the week were encouraging, pushing the main Stock Indices and the euro up. Gold and oil have also been on the rise, while Bitcoin seems to be making its way to new highs.
The US and Europe seem to be slowly coming out of the crisis caused by the pandemic and the continuous rise of the Stock Markets, shows that investors are already pulsing the next day.
This week is dominated by the announcement of Inflation in the US that will certainly affect the dollar, while other important announcements are considered as well: Monetary Policy Minutes in the Eurozone, Inflation in Germany, Retail Sales in the US, GDP in the UK, Inflation in China and Retail Sales in Australia.

SP500

The US SP500 closed last week with significant gains, closing at 4,227 points, rising close to 1.15%. The bulk of the rise took place at the end of the week and was accompanied by a new record high of all time, following disappointing results from the US labor market. Investors expect continued support for the economy through loose Monetary Policy and fiscal expansion, which will support Stock Markets. Vaccinations continue, the pandemic is receding and this further raises expectations for a faster economic recovery. There is of course the possibility of corrections, mainly through the commitment of President Biden to increase taxation and the impact it will have on the markets but also due to the possibility of securing profits, but no one doubts that the Index has a strong uptrend momentum. We prefer long positions for this week too.

DAX30

After two declining weeks, the German DAX30 Index recovered, closing at 15,403 points, recording gains of about 1.80%. Macroeconomic data in the Eurozone have been encouraging, vaccinations are continuing at a satisfactory pace in Europe and so there is widespread optimism. The buyers’ goal is a new record of over 15,520 points, without excluding any profit-taking that could lead to corrections. We insist on long positions.

 

FTSE100

Last week, the UK FTSE100 Index rose strongly, closing at 7,110 points, with gains approaching 2.70%. Vaccinations in the UK have allowed the most economic activity to open up and the Index has easily crossed the 7,000-points milestone price. Many analysts predict prices even above 7,600 points but the reality of the post-Brexit era with all the problems it carries can lead to a sharp landing. In any case, we’ll try long positions for one more week.

 

Gold

The week ended explosively for gold, which at the end of the week was at $ 1,831.5, with gains close to 3.60%. Investors trusted the gold seeing the disappointing results of the US labor market and believed that the economic recovery is not so rosy. There is also the expectation of a high Inflation announcement in the US (it may have reached 2.3% in April on an annual basis), which will push gold even higher. The big rival at the moment as a safe-haven asset in inflation that is Bitcoin seems to have stabilized in recent weeks and so based on all the other data we have listed, many analysts see gold at higher prices shortly. Under these considerations, we’re keen to try long positions in the current week.

 

US Oil

Last week was bullish for oil, with next month futures closing at $ 64.81, with gains above 2%. The highlight of the week was undoubtedly the cyber-attack on the largest fuel pipeline system in the United States, the Colonial Pipeline. The United States has already declared a state of emergency to maintain the flow of oil after the attack, but the news has already raised concerns amid rising oil demand over the summer. The opening of the week, however, is reassuring without a big rise in prices and with relatively low volatility. Positive demand for oil has pushed up oil prices, with year-on-year highs near $ 68, so we may try long positions this week.

 

EURUSD (Euro vs US Dollar)

Last week we saw a strong uptrend for the EURUSD that opened at 1.2031 and closed at 1.2163, driven mainly by the weak dollar after the announcement of new jobs in the US, which as we saw was disappointing. In contrast, news in Europe (Retail Sales and Factory Orders in Germany, PMIs, and Retail Sales in the Eurozone) exceeded expectations. There has been an emerging uptrend for the pair since the beginning of April and the price area of 1.17 and buyers are starting to look forward to the highs of about 3 years above 1.2350. Buy positions is our selection for the current week.

 

GBPUSD (Great Britain Pound – US Dollar)

Last week closed with a significant rise for the GBPUSD, with an opening price at 1.3811 and a closing price at 1.3987. The pair was found a breath away from the milestone price of 1.40, which it has exceeded at the beginning of the current week. In addition to the weakening dollar caused by the announcement of new jobs in the US, the announcement by the Bank of England to limit the bond-buying program from 4.4 billion a week to 4 3.4 billion also played a key role in the pair. This makes the UK monetary policy tighter, strengthening the currency. Buyers now have reason to be optimistic about prices even close to 1.4240 which is a high of about 3 years. We’ll try buy positions this week.

 

USDJPY (US Dollar – Japanese Yen)

The USDJPY dropped last week, opening at 109.27 and closing at 108.58. The dollar lost ground, mainly due to the negative image of the US labor market, but the yen appeared relatively strong, even there are no new economic announcements in Japan. If the negative news for the dollar continues, mainly through the announcement of Inflation in the US, then we may see the exchange rate even lower towards the support of 107.50, so we would try sell positions.

EURJPY (Euro – Japanese Yen)

We saw another bullish week for the EURJPY, which opened at 131.49 and closed at 132.08. It is worth noting that only in 3 of the last 16 weeks, the pair was down, with slight declines. There is therefore a strong uptrend mainly due to the strong euro and now the target of many buyers is the price range of 135. We’ll follow this trend by opening buy positions this week.

EURGBP (Euro – Great Britain Pound)

The previous week for the EURGBP closed with stabilizing to slightly declining trends, opening at 0.8708 and closing at 0.8695. A strong euro and a strong pound have created a balance for the past few weeks without very low volatility. Tighter Monetary Policy in the UK may give the pound a further advantage over the euro, which relies heavily on macroeconomic variables. Low-risk sell positions is our selection for the current week.

 

USDCAD (US Dollar – Canadian Dollar)

USDCAD is in free fall, as in the last week it opened at 1.2288 and closed at 1.2129, with the acceleration of the downtrend. The US currency weakened further after the announcement of the Unemployment Rate in the country and the Canadian dollar strengthened due to rising oil prices and the announcement of the Bank of Canada that the bond repurchase program will be reduced from 4 billion to 3 billion per week. The Bank of Canada also announced that it expects the country to have fully recovered from the pandemic in the second half of 2022 and during this period there may begin to consider raising Interest Rates. The pair is approaching the lows we have been seeing since September 2017 and we’ll try sell positions.

 

USDCHF (US Dollar – Swiss Franc)

It was the fifth consecutive bearish week for the USDCHF, which opened at 0.9120 and closed at 0.9005, a breath away from the psychological level of 0.90. The downtrend is evident and in a possible bearish breakout of 0.90, traders of the pair will look to see prices close to the support of 0.8870. We may try sell positions after a solid breakout below 0.90.

 

AUDUSD (Australian Dollar – US Dollar)

Last week was bullish for the AUDUSD which opened at 0.7720 and closed at 0.7843. The US dollar was particularly weak at the end of the week, but the Australian currency also benefited from higher commodity prices, especially metals. The Bank of Australia revised its Unemployment Rate and Growth (GDP) forecasts for the better, also raising positive expectations. The pair could again reach 0.80 (as it did in February) with the only point being that it could cost the AUD, the possible frictions in Australia-China relations. We will continue opening buy positions for one more week.

 

Bitcoin

Bitcoin continued to rise for the second consecutive week, closing at $ 58,305 with gains approaching 3%. Bitcoin seems to be recovering after its recent correction and crypto traders are now optimistic about the recovery of $ 60,000, while there is a generally positive climate in all cryptocurrencies. The market is also expecting the issuance of mini futures contracts for Bitcoin that will make it accessible to a large portion of investors who want short positions and leverage. We prefer long positions this week.

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