The ISM manufacturing index published earlier in the week painted an even more dramatic picture, falling to a near three-year low of 46.3, with the employment component deepening further into contraction territory.
Both indices were much weaker than expected, as were the S&P Global PMI estimates. Such data does not provide a positive signal ahead of Friday's NFP.
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Both indices were much weaker than expected, as were the S&P Global PMI estimates. Such data does not provide a positive signal ahead of Friday's NFP.
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The crypto market lost 0.5% in 24 hours, bouncing back to $1.18 trillion. This level has become the centre of gravity around which the market has been moving all week. So far, it looks like a pause and consolidation but not a breakout.
Bitcoin has fared better this time around, losing 0.4% and remaining stuck at $28K for the past three weeks. Notably, there has been no deep correction or noticeable upward bias during this time. Bitcoin's rally has stalled in the area that provided meaningful support in May and early June last year. An upside move would be a significant milestone to restore long-term investor confidence.
On the other hand, a deeper drawdown below $27.0K or even to $25.5K may be required before a move higher, which would fully correct the rise from the early March lows and clear the way to the upside.
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Bitcoin has fared better this time around, losing 0.4% and remaining stuck at $28K for the past three weeks. Notably, there has been no deep correction or noticeable upward bias during this time. Bitcoin's rally has stalled in the area that provided meaningful support in May and early June last year. An upside move would be a significant milestone to restore long-term investor confidence.
On the other hand, a deeper drawdown below $27.0K or even to $25.5K may be required before a move higher, which would fully correct the rise from the early March lows and clear the way to the upside.
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🐣Easter Market Holidays: Changes to Trading Schedule
With the US and EU observe this festive time, please be aware of potential impacts on your trading activities, as several markets are closed today and Monday. 🐰🌼
👉Check the full schedule
Wishing you all a happy and prosperous Easter season from the FxPro team! 🎉
With the US and EU observe this festive time, please be aware of potential impacts on your trading activities, as several markets are closed today and Monday. 🐰🌼
👉Check the full schedule
Wishing you all a happy and prosperous Easter season from the FxPro team! 🎉
Indicators point to a weak NFP
One of the most timely and unpredictable economic reports, the US Nonfarm Payrolls report for March, will be released on Friday. Market participants will look to other publications to shed light on the situation.
The average forecast among market participants is for the economy to have created 230K jobs in March, down from 311K the previous month. However, these forecasts were made about a week ago, and the data that has come in since then suggests that the actual number will be much weaker.
The change in ADP private sector employment, the closest indicator to the headline NFP figure, missed expectations, showing a gain of 145K after 261K the previous month versus expectations of 208K and an official reading of 443K.
One of the most timely and unpredictable economic reports, the US Nonfarm Payrolls report for March, will be released on Friday. Market participants will look to other publications to shed light on the situation.
The average forecast among market participants is for the economy to have created 230K jobs in March, down from 311K the previous month. However, these forecasts were made about a week ago, and the data that has come in since then suggests that the actual number will be much weaker.
The change in ADP private sector employment, the closest indicator to the headline NFP figure, missed expectations, showing a gain of 145K after 261K the previous month versus expectations of 208K and an official reading of 443K.
Weekly jobless claims fell from 246K to 228K last week but remained in an uptrend since late January from a low of 194K. Initial claims have been on an uptrend since September and have increased by 42K in the last four weeks.
At the same time, according to estimates by Challenger, Gray & Christmas, there continues to be an impressive year-on-year increase in planned redundancies.
Companies reported plans to cut 89.7K jobs, 3.2 times higher than a year ago and 15% higher than last month. Again, it's hard to see signs of sustained strength in the labour market.
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At the same time, according to estimates by Challenger, Gray & Christmas, there continues to be an impressive year-on-year increase in planned redundancies.
Companies reported plans to cut 89.7K jobs, 3.2 times higher than a year ago and 15% higher than last month. Again, it's hard to see signs of sustained strength in the labour market.
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🔔Upcoming NFP @12:30 GMT
with 235K new jobs expected.
💵 Be prepared for USD volatility!
with 235K new jobs expected.
💵 Be prepared for USD volatility!
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The US economy added 236K jobs in March, very close to the average forecast. The unemployment rate fell 0.1 percentage point to 3.5%, while the labour force participation rate rose from 62.5% to 62.6%, vs the expected fall to 62.4%.
Looking at this data, we can again see that the US labour market is in great shape, ignoring all the warning signs and threats. In the minutes following the release of the data, the interest rate futures market increased the odds of another Fed rate hike in early May from 50% to 70%. This should be good news for the dollar and not so good for the high-tech Nasdaq index, which is struggling to get a rate hike.
Looking at this data, we can again see that the US labour market is in great shape, ignoring all the warning signs and threats. In the minutes following the release of the data, the interest rate futures market increased the odds of another Fed rate hike in early May from 50% to 70%. This should be good news for the dollar and not so good for the high-tech Nasdaq index, which is struggling to get a rate hike.
Digging deeper, however, the report is not so positive. The private sector added 189K jobs - the lowest number since December 2020. Construction and manufacturing saw net job losses of 9K and 1K, respectively. Not much, but it already looks like a turnaround, which often starts with these sectors.
The index of weekly wages paid has been stagnant since the beginning of the year, as has the index of hours worked, as employment growth is offset by a fall in the average working week. Except for the first COVID-19 lockdowns, a similar pattern was only observed in 2008 and ended with a sharp decline.
We also note that the growth in total employment is not warming up wages. Its growth rate has fallen to 4.2% YoY as growth in the service sector absorbs low-paid workers returning to the labour market (as we can see from the rise in the participation rate).
The index of weekly wages paid has been stagnant since the beginning of the year, as has the index of hours worked, as employment growth is offset by a fall in the average working week. Except for the first COVID-19 lockdowns, a similar pattern was only observed in 2008 and ended with a sharp decline.
We also note that the growth in total employment is not warming up wages. Its growth rate has fallen to 4.2% YoY as growth in the service sector absorbs low-paid workers returning to the labour market (as we can see from the rise in the participation rate).
#WaveAnalysis
#EURNZD reversed from long-term resistance level 1.7450
• Likely to fall to support level 1.7300
EURNZD recently reversed down from the major, long-term resistance level 1.7450 (which has been steadily reversing the price from the end of September) standing near the upper daily Bollinger Band.
The downward reversal from the resistance level 1.7450 stopped the previous short-term impulse waves (iii), 3 and (C).
Given the bearish divergence on the daily Stochastic, EURNZD can then be expected to fall further toward the next support level 1.7300.
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#EURNZD reversed from long-term resistance level 1.7450
• Likely to fall to support level 1.7300
EURNZD recently reversed down from the major, long-term resistance level 1.7450 (which has been steadily reversing the price from the end of September) standing near the upper daily Bollinger Band.
The downward reversal from the resistance level 1.7450 stopped the previous short-term impulse waves (iii), 3 and (C).
Given the bearish divergence on the daily Stochastic, EURNZD can then be expected to fall further toward the next support level 1.7300.
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#WaveAnalysis
#NZDCHF reversed from key support level 0.5630
• Likely to rise to resistance level 0.5700
NZDCHF recently reversed up from the key support level 0.5630 (previous monthly low from the middle of March) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.5630 stopped the previous short-term impulse wave 3 – which belongs to the intermediate impulse wave (3) from March.
Given the oversold daily Stochastic, NZDCHF can then be expected to rise further toward the next resistance level 0.5700.
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#NZDCHF reversed from key support level 0.5630
• Likely to rise to resistance level 0.5700
NZDCHF recently reversed up from the key support level 0.5630 (previous monthly low from the middle of March) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.5630 stopped the previous short-term impulse wave 3 – which belongs to the intermediate impulse wave (3) from March.
Given the oversold daily Stochastic, NZDCHF can then be expected to rise further toward the next resistance level 0.5700.
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#WaveAnalysis
#AUDCHF reversed from strong support level 0.6035
• Likely to rise to resistance level 0.6120
AUDCHF recently reversed up from the strong support level 0.6035 (which stopped the previous intermediate impulse wave (1) in March) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.6035 stopped the previous short-term impulse wave 3 – which is a part of the higher order downward impulse wave (3) from last month.
Given the strength of the support level 0.6035 and the clear bullish divergence on the daily Stochastic, AUDCHF can then be expected to rise further toward the next resistance level 0.6120.
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#AUDCHF reversed from strong support level 0.6035
• Likely to rise to resistance level 0.6120
AUDCHF recently reversed up from the strong support level 0.6035 (which stopped the previous intermediate impulse wave (1) in March) intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.6035 stopped the previous short-term impulse wave 3 – which is a part of the higher order downward impulse wave (3) from last month.
Given the strength of the support level 0.6035 and the clear bullish divergence on the daily Stochastic, AUDCHF can then be expected to rise further toward the next resistance level 0.6120.
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#Bitcoin gained 1.9% over the past seven days to $28.3K. #Ethereum up 4% to $1860. Other top ten altcoins performance ranging from a 1.4% decline (#XRP) to a 6.2% gain (#Dogecoin).
The total crypto capitalisation rose 2% over the week to $1.185 trillion.
Bitcoin has been consolidating sideways, around $28K, for three weeks now. On Monday morning, the price briefly spiked above $28.5K in a thin market. On the daily timeframe, the range has narrowed since the beginning of the month, forming a bullish triangle. It is believed that the price will continue to move toward the breakout, with a rise above $29K opening the way to $35K, while a break below $27.5K may pave the way to $25.5K.
The latest recalculation of Bitcoin's mining difficulty showed a new record, up 2.23% to 47.89T. The 25% increase in the hash rate since the beginning of the year indicates growing confidence in the network.
The total crypto capitalisation rose 2% over the week to $1.185 trillion.
Bitcoin has been consolidating sideways, around $28K, for three weeks now. On Monday morning, the price briefly spiked above $28.5K in a thin market. On the daily timeframe, the range has narrowed since the beginning of the month, forming a bullish triangle. It is believed that the price will continue to move toward the breakout, with a rise above $29K opening the way to $35K, while a break below $27.5K may pave the way to $25.5K.
The latest recalculation of Bitcoin's mining difficulty showed a new record, up 2.23% to 47.89T. The 25% increase in the hash rate since the beginning of the year indicates growing confidence in the network.
#WaveAnalysis
#GBPJPY reversed from support level 163.55
• Likely to rise to resistance level 166.00
GBPJPY currency pair recently reversed up from the pivotal support level 163.55 (former resistance level which has been reversing the price from the start of March).
The upward reversal from the support level 163.55 runs counter to the active intermediate impulse wave (C) from the start of April.
Given the strong yen sales, GBPJPY can then be expected to rise further toward the next resistance level 166.00 (top of the previous impulse wave C).
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#GBPJPY reversed from support level 163.55
• Likely to rise to resistance level 166.00
GBPJPY currency pair recently reversed up from the pivotal support level 163.55 (former resistance level which has been reversing the price from the start of March).
The upward reversal from the support level 163.55 runs counter to the active intermediate impulse wave (C) from the start of April.
Given the strong yen sales, GBPJPY can then be expected to rise further toward the next resistance level 166.00 (top of the previous impulse wave C).
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#WaveAnalysis
•#FTSE100 broke key resistance level 7600.00
• Likely to rise to resistance level 7800.00
FTSE 100 index recently broke the key resistance level 7600.00 (former top of the impulse wave 1 from the middle of March).
The breakout of the resistance level 7600.00 coincided with the breakout of the 50% Fibonacci correction of the previous sharp downward impulse wave C from the start of last month.
Given the strong daily uptrend, FTSE 100 index can then be expected to rise further toward the next resistance level 7800.00.
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•#FTSE100 broke key resistance level 7600.00
• Likely to rise to resistance level 7800.00
FTSE 100 index recently broke the key resistance level 7600.00 (former top of the impulse wave 1 from the middle of March).
The breakout of the resistance level 7600.00 coincided with the breakout of the 50% Fibonacci correction of the previous sharp downward impulse wave C from the start of last month.
Given the strong daily uptrend, FTSE 100 index can then be expected to rise further toward the next resistance level 7800.00.
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Bitcoin soars past $30K
The total capitalisation of the crypto market rose 4.5% to $1.24 trillion, the highest since June last year and a colourful end to several days of consolidation. Bitcoin was the main driver, although BNB, Cardano, Solana and Litecoin also outperformed the market, rising between 5.5% and 11%.
Bitcoin continued its storm of highs early on Tuesday, peaking at $30.4K and holding above $30K after a minor correction. This jump in a thin market marked the end of a consolidation triangle and a corrective pullback after a March rally.
The target for the first pattern is the $40K area, while the second pattern sets up a rapid rise towards $35K, which is more realistic in the current market, as it already looks slightly speculatively overbought.
Open interest in bitcoin options exceeded open interest in bitcoin futures for the first time, indicating expectations for BTC growth, Glassnode noted.
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The total capitalisation of the crypto market rose 4.5% to $1.24 trillion, the highest since June last year and a colourful end to several days of consolidation. Bitcoin was the main driver, although BNB, Cardano, Solana and Litecoin also outperformed the market, rising between 5.5% and 11%.
Bitcoin continued its storm of highs early on Tuesday, peaking at $30.4K and holding above $30K after a minor correction. This jump in a thin market marked the end of a consolidation triangle and a corrective pullback after a March rally.
The target for the first pattern is the $40K area, while the second pattern sets up a rapid rise towards $35K, which is more realistic in the current market, as it already looks slightly speculatively overbought.
Open interest in bitcoin options exceeded open interest in bitcoin futures for the first time, indicating expectations for BTC growth, Glassnode noted.
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Chinese disinflation
Consumer inflation in China fell to 0.7% YoY in March from 1.0% in the previous month. Last month's producer price index was 2.5% lower than a year earlier, accelerating its decline from 1.4% in February.
The hypothesis that China's move away from a 0-covid policy is driving down prices rather than pushing them up, as has been the case in the developed world, remains valid. In this case, we are seeing a normalisation of the economy, which in turn is normalising prices after the spike of previous years.
Consumer inflation in China fell to 0.7% YoY in March from 1.0% in the previous month. Last month's producer price index was 2.5% lower than a year earlier, accelerating its decline from 1.4% in February.
The hypothesis that China's move away from a 0-covid policy is driving down prices rather than pushing them up, as has been the case in the developed world, remains valid. In this case, we are seeing a normalisation of the economy, which in turn is normalising prices after the spike of previous years.
The stabilisation of supply chains is also evident in the stabilisation of container prices, which have returned to the region of $1,500 (the norm, at least from October 2016 to April 2020) after spiking above $10,000 in the last quarter of 2021.
The normalisation of logistics complements the fall in producer prices, taking inflationary pressure off the developed world. And this is good news for risk demand, as it will allow the world's biggest central banks to stop tightening policy more quickly.
However, falling producer prices may also signal a sharp contraction in demand in the developed world. Although it signals the end of the interest rate hike cycle in Europe and America, it promises more negativity. In this case, things will get worse before they get better.
The normalisation of logistics complements the fall in producer prices, taking inflationary pressure off the developed world. And this is good news for risk demand, as it will allow the world's biggest central banks to stop tightening policy more quickly.
However, falling producer prices may also signal a sharp contraction in demand in the developed world. Although it signals the end of the interest rate hike cycle in Europe and America, it promises more negativity. In this case, things will get worse before they get better.
Japan is recovering, but what about the Yen?
After last year's shock, Japan's economic indicators are slowly returning to normal. But conditions are still unsuitable for raising interest rates for the Bank of Japan. This is not good news for the Yen. The interest rate differential, which has risen sharply over the past year, creates the conditions for carry trade. The only obstacle to an active interest rate differential play is the uncertainty surrounding monetary policy due to the change in the central bank governor.
The balance of payments rebounded from last month's record deficit as the February trade deficit fell to its lowest level in 11 months. The balance of payments appears to have turned around. This is supported by lifting China's export restrictions and falling container prices, which should boost demand for goods from Japan.
After last year's shock, Japan's economic indicators are slowly returning to normal. But conditions are still unsuitable for raising interest rates for the Bank of Japan. This is not good news for the Yen. The interest rate differential, which has risen sharply over the past year, creates the conditions for carry trade. The only obstacle to an active interest rate differential play is the uncertainty surrounding monetary policy due to the change in the central bank governor.
The balance of payments rebounded from last month's record deficit as the February trade deficit fell to its lowest level in 11 months. The balance of payments appears to have turned around. This is supported by lifting China's export restrictions and falling container prices, which should boost demand for goods from Japan.
In addition, consumer optimism is on the rise. Household consumer confidence has risen every month since November, from 31.3 to 33.9 in March, the highest level since May last year.
The "economic watchers" survey also returned to last year's highs in current conditions and was at its highest level since October 2021 in terms of forecasts.
A key driver of the Yen's appreciation in recent months has been speculation about a change in monetary policy. Expectations have grown that Kuroda's resignation as governor of the Bank of Japan would trigger a tightening of monetary policy. But so far, there has been no real change or even a hint in that direction from the new BoJ governor, who formally took office on 9 April. His latest speech signalled that he would continue to ease policy.
He has not been seen as a proponent of tightening policy, but a confirmation after his inauguration could potentially trigger a new wave of pressure on the Japanese currency.
The "economic watchers" survey also returned to last year's highs in current conditions and was at its highest level since October 2021 in terms of forecasts.
A key driver of the Yen's appreciation in recent months has been speculation about a change in monetary policy. Expectations have grown that Kuroda's resignation as governor of the Bank of Japan would trigger a tightening of monetary policy. But so far, there has been no real change or even a hint in that direction from the new BoJ governor, who formally took office on 9 April. His latest speech signalled that he would continue to ease policy.
He has not been seen as a proponent of tightening policy, but a confirmation after his inauguration could potentially trigger a new wave of pressure on the Japanese currency.