Market Drivers – US Session 03/04/2023

Mohamed Abdelhamid 4 April, 2023 4:50 am Commodities, Forex Market, Market Update

On Monday, OPEC+ surprised the markets by substantially raising crude oil prices, yet Wall Street continued to advance. The regular suspects will once again be the focus on Tuesday. The Reserve Bank of Australia (RBA) will hold its monetary policy meeting, while the Eurozone’s February Producer Price Index will provide additional inflation data. The markets begin preparing for US job data.

Key Developments

After the decision of the OPEC+, Wall Street indexes reached fresh monthly highs. The Dow Jones gained almost 1%, the S&P 500 rose by 0.37%, but the Nasdaq dropped 0.25%. If crude oil prices continue to increase, it will revive inflation concerns and mount pressure on central banks.

Crude oil prices rose dramatically at the start of the week due to an unexpected voluntary cut (a million barrels per day off starting in May) from the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The price of a WTI barrel increased by more than 5%, rising beyond $80.00, its highest point since mid-January.

The 10-year yield fell to 3.41%, marking the lowest finish in a week as US yields plunged. Looking at March lows, the US Dollar Index is circling around 102.000. The Japanese Yen benefited from lower yields. From weekly highs, USD/JPY reversed and dropped to 132.40.

AUD/USD increased as the Australian dollar outperformed, approaching 0.6800. The Reserve Bank of Australia will reveal its choice for monetary policy. From a no hike to a 25 basis point hike, the consensus has altered. The choice and the recommendations will apply to the Australian Dollar.

EUR/USD experienced a significant recovery from levels below 1.0800 to those over 1.0900. The crucial resistance is still in the vicinity of 1.0930. On Tuesday, the Eurozone will release the February Producer Price Index. GBP/USD resumed the upside, and is near the Year-to-Date high above 1.2400.

USD/CHF dropped to 0.9120, while EUR/CHF posted gains on Monday and settled at 0.9950. Switzerland reported inflation with the Consumer Price Index at 2.9% YoY, below the 3.2% of market consensus.

From its daily lows, gold gained more than $30 before hitting $1,990 as resistance. Around $24.00, silver is in a sideways movement. The popularity of cryptocurrencies waned; Bitcoin couldn’t hold steady above $28,000. Following Twitter’s changing of the logo to the Doge meme, Dogecoin experienced a more than 35% increase before declining.

Economic Data

The US Dollar lost ground on Monday, affected by risk appetite and lower US yields on the back of softer-than-expected US Economic data. The ISM Manufacturing PMI came in at 46.3 in March versus the 47.5 expected. The ISM Service PMI and the ADP Employment report are due on Wednesday.

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