Weekly Outlook Report - April W2

On Friday the 7th of April, the greenback witnessed an increase of 0.16%. this was due to the release of labor data such as the Non-Farm Employment Change (NFP) and the Unemployment rate.  


The NFP experienced a decrease from 326K to 236K, indicating that there has been a decline in the number of jobs in the county excluding the farming sector, noting the market expectation was surpassed by 8K jobs. 


On the other hand, the Unemployment rate decreased from 3.6% to 3.5%, indicating that there is a decrease in the population that is not working, which may encourage higher levels of consumer spending, potentially boosting the overall economy.  


 As a result, earlier in today’s session, the U.S Dollar was able to maintain its upward momentum, causing other major currencies to come under stress such as the Chinese Yuan, whereby the USD/CNY pair faced an increase of 0.07%. 


Last week the EUR/USD pair witnessed an increase of 0.55%, due to the possibility of a continuation in rate hikes by the European central bank in the upcoming months to battle inflation.  


Furthermore, the GBP/USD pair experienced an increase of 0.71% the previous week. The Bank of England (BOE) is still uncertain of its latest decisions given that inflation rose unexpectedly rose to 10.1% in February.  


During the previous week, the Dow Jones index experienced a 0.6% increase, while the Nasdaq index recorded a 1.1% decrease, and the SP500 index showed a slight loss of 0.1%. During the previous week, there were numerous economic releases.

U.S. manufacturing activity and services activity for the month of March came in well below expectations. The ISM manufacturing index, a gauge of manufacturing health, fell to a near three-year low of 46.3, below expectations of 47.5. Similarly, the ISM services index came in at 51.2, below expectations of 54.4, although still slightly in expansion territory.


The Labor Department reported Friday that payrolls grew by 236,000 for the month, compared to the Dow Jones estimate of 238,000 the total was the lowest monthly gain since December 2020 and comes amid efforts from the Federal Reserve to slow labor demand in order to cool inflation.


It is probable that the CPI and PPI data for this week will emphasize the persistently high inflation, leading to the expectation of the continuation of a hawkish stance in the Fed's comments.

West Texas Intermediate was little changed around $81 a barrel after rallying almost 7% last week following the move by the Organization of Petroleum Exporting Countries and its allies. While OPEC+’s surprise decision has reignited bullish bets on prices, some demand indicators are showing signs of weakness as slowdown concerns persist.


While US inventories have been declining, global inventories are still high. In the first quarter, commercial oil stockpiles held in OECD countries were sitting about 8% above last year’s levels, according to US Energy Information Administration estimates. That’s a fairly sizeable buffer and a sign of the weakness in consumption that’s plagued the market in the past few months.


Gold rose the previous week by 2% to close at $2007 an ounce, this rise came after the issuance of many economic data that indicated a slowdown in the US labor market, the number of vacancies decreased to 9.93 million jobs, less than the previous reading of 10.82, the private sector also added jobs Less than expected at 145 thousand jobs, the non-farm payrolls data fell to 236 thousand jobs, and therefore all these data negatively affected the dollar, given that the labor market and the US economy began to suffer.


The International Monetary Fund also warned of a slowdown in the global economy during the next five years, given that geopolitical factors and inflationary pressures are still affecting the global economy. Therefore, fears are still continuing, and gold was positively affected by these expectations, given that gold is a safe haven tool during economic crises.


This week, the markets are awaiting US inflation data. Expectations indicate that inflation rose by 5.2%, less than the previous reading of 6%. This means that inflation has declined for the ninth month in a row. Analysts expect it to positively affect gold prices if it came as expected, given that the Fed may head to less stringent monetary policy during the coming period.


From a technical point of view (Figure 1), gold overcame the triangle pattern and reached the level of $2032 an ounce, to close at $2007 an ounce. So far, gold has not succeeded in stabilizing above the technical and psychological levels at $2000 an ounce. Currently, the $2010 levels are considered resistance levels for gold, Exceeding may be positive for prices, but if that gold breaks the levels of $1990 an ounce, this may constitute negativity for the price movement.


XAUUSD chart

Figure 1: XAUUSD,Metatrader5, CFI Brokerage



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