Market Drivers – US Session 04/04/2023

While gold has jumped, US treasury yields retreated, the US dollar was seen under pressure on Tuesday. The dollar is still under pressure ahead of more employment statistics, notably the NFP on Friday, as a result of weak US economic data. On Wednesday, the ADP Employment report is expected. The Reserve Bank of New Zealand’s decision will be the major event during Asian hours. The central bank will pause before RBA Lowe speaks. Although it appears that losses will continue, the new economic figures could be helpful for the US dollar.

Economic Data

The JOLTs report showed job openings fell to 9.93 million, the lowest level since May 2021, while Factory Orders fell by 0.7%.

The US economic figures pushed US yields further to the downside and were not cheered by Wall Street. The Dow Jones lost 200 points or 0.59%, the Nasdaq declined by 0.52%, and the S&P 500 by 0.58%.

Key Developments

The US Dollar Index posted the lowest close in two months on Tuesday after falling for the second day in a row. Economic data did not help the Dollar on Tuesday. The Japanese Yen outperformed during the American session, favored by lower yields and the deterioration in market sentiment. As a result, USD/JPY lost ground for the second day in a row, breaking below 132.00.

EUR/USD continued to move higher and approached 1.1000. The Pound also outperformed as GBP/USD jumped to 1.2500, breaking decisively above December and January highs. The Australian Dollar weakened following the pause from the Reserve Bank of Australia (RBA); however, the AUD/USD still looks bullish, holding above 0.6720. RBA Governor Lowe will speak on Wednesday.

On Wednesday, the Reserve Bank of New Zealand will announce its decision. A 25 basis points rate hike to 5% is expected. NZD/USD is trading above 0.6300, at the highest since mid-February.

Crude oil prices finished flat on Tuesday, holding on to Monday’s rally following the OPEC+ output cut. If prices resume the upside, it would be another problem for central bankers around the world.

Gold bulls welcomed lower US yields. XAU/USD finally rose above $2,000, and it holds near the recent highs at the $2,020 area, with a strong momentum. Silver joined the rally, and soared to $25.00, the highest level in a year.

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