Market Drivers – US Session 30/03/2023

Oil futures turned bullish on Thursday’s US session, driven by the improvement in risk appetite and the emergence of expectations that OPEC + will keep its production policy unchanged, adopting the same levels of increased production. US oil futures rose to $74.24 a barrel, compared to the previous daily closing of $72.78 a barrel. US crude fell to its lowest level in the current trading day at $72.66, compared to the highest level, which hit $74.58.

In response to risk appetite and the release of German inflation statistics, the US Dollar index is under pressure, especially when compared to the Euro. The attention will be on the inflation rates for the US and the Eurozone on Friday. Together with the publication of Industrial Production and Retail Sales, Japan will also disclose the Tokyo CPI. China’s official PMI for the manufacturing and service sectors will be made public during Asian hours.

Thursday is a good day for Wall Street once again, and the Treasuries market is calm. The Nasdaq touched seven-month highs, while the Dow Jones gained 140 points, or 0.43%, to notch its biggest daily closing in two weeks. The banking concerns are still fading, and the economic data doesn’t indicate a hard or even a gentle landing. Only an uncertain outlook is taking the place of a pessimistic one.

Key Developments

“The challenge in assessing today’s economy is reconciling the strength of the recent data with the potential for weakness coming from the banking system,” Tom Barkin, Richmond Fed President. The bond market doesn’t appear to be as upbeat as the stock market. On Thursday, US yields moved in a neutral direction without reflecting risk taking. Following Friday’s US Core Personal Consumer Spending data, bonds will likely move in a more determined way.

In order to test the recent peak, EUR/USD increased over 1.0900. The pair is still bullish and has made significant weekly gains, but Friday’s big economic data deadline could present some difficulties. Thanks to increased risk taking and a weaker Dollar, the GBP/USD exchange rate closed at its highest level in two months, close to 1.2400.

USD/JPY is moving sideways around 132.60. The US Dollar and the Japanese Yen are suffering from the rally in Wall Street. USD/CHF posted the lowest close in weeks and is approaching the key long-term support at 0.9050.

NZD/USD increased above 0.6250, while AUD/USD increased above 0.6700. The USD/CAD exchange rate dropped for the fourth day in a row and is still going downward. It was last spotted trading near 1.3525.

The currencies of emerging markets had a good day. The South African Rand (ZAR) saw the highest gains after the central bank startled market participants by raising interest rates more than anticipated. As predicted, the Bank of Mexico increased interest rates by 25 basis points. Silver rose 2.40% to $23.80, the highest level in two months, while Gold broke above $1,970 and went above $1,980.

Economic Data

German inflation data revealed a significant yearly rate drop, but not by as much as was anticipated. Consumer Price Index (CPI) for the Eurozone is expected on Friday. Inflation is slowing down but is still high, according to early March data, which is consistent with what European Central Bank (ECB) officials officially state.

Due to important inflation data on Friday as well as the fact that it is the final trading day of the week, month, and quarter, volatility is expected to increase.

According to Labour Department figures released on Thursday, more Americans than anticipated last week filed for jobless benefits. Initial jobless claims that were seasonally adjusted for the week that ended on March 25 increased to 198,000 from an unrevised number of 191,000 the previous week. According to economists’ predictions, the number would increase to 196,000.

The US Bureau of Economic Analysis (BEA) released its final estimate on Thursday, revealing that the US real Gross Domestic Product (GDP) increased at an annualized rate of 2.6% in the fourth quarter. This number was below than the 2.7% market forecast as well as the prior estimate.

Also Read:

Gold Benefits from Thursday’s Softer US Dollar

EUR/USD defends 1.0900 ahead of German Retail Sales

GBP/USD surges towards the psychological 1.24 level

Dow jumps more than 100 points on easing banking fears

US stocks make biggest moves midday

USD/CAD slips as risk appetite improves

China-driven growth boost emerging assets despite bank worries