Market Drivers – US Session – 7 April

Mohamed Abdelhamid 8 April, 2022 3:35 am Commodities, Forex Market, Market Update

The market’s sentiment continued cautious as traders’ focus shifted to central banks’ hawkish rhetoric and tensions between the US allies and Russia. The US widened its actions against Moscow, hitting Russian Sberbank and Alfa Bank. Investment in Russia by American companies is banned. The EU is backing a Russian coal embargo, although without officially confirming it. The dollar remained strong throughout the trading session.

Economic data
There were 166,000 Initial Jobless Claims in the US in the week ending on 2 April, the latest release from the US Department of Labour on Thursday showed, a record low.

That was well below the median economist forecast for a reading of 200,000 and a steep drop from the prior week’s 202,000. That meant the four-week average fell to 170,000 from 178,000 the week before.

Other Developments

The European Central Bank released the Accounts of its latest meeting. The document showed that policymakers believe the bond-buying program has now fulfilled its objective, and by ending it in the summer, it would clear the way for a 3Q rate hike.

Atlanta Fed President Raphael Bostic said on Thursday that while it is fully appropriate that the Fed move policy closer to a neutral position, it should do so in a cautious way. It’s going to take longer than initially thought for supply chain issues to resolve, he added, noting that the Fed’s goal is to try to have sustained growth that extends for as long as possible.

Earning expectations for the big banks have been dialed back through the first quarter amid Russia sanctions and a steep decline in deal activity. Big US banks are expected to reveal the impact of the Ukraine war and a drop in investment banking activity related to moribund capital markets when they provide first-quarter profit updates next week.

Asian and European equities closed in the red territory, but Wall Street managed to recover some ground after two days of sharp losses. At the same time, government bond yields held at the upper end of the range, with the 10-year US Treasury note yielding 2.65% by the end of the day.

The EUR/USD pair trades around 1.0870, while GBP/USD stands at 1.3070. The dollar appreciated against its safe-haven rivals, with USD/CHF trading at 0.8340 and USD/JPY near 124.00.
Commodity-linked shed some ground, with AUD/USD down to 0.7470 and USD/CAD up to 1.2585.

On Thursday, Ukraine has presented a new agreement proposal, although it includes discussing the situation of Crimea and Donbass, something that Russia considers unacceptable.