The trading week started with a bang, as the better-than-expected NFP numbers pushed stocks higher across the board. Risk-on dominates markets, as stocks started the new quarter pushing to new all-time highs.
Truth be said, the NFP report from last Friday blew all expectations. On the one hand, the report showed that the U.S. economy added close to one million new jobs in March alone. On the other hand, the unemployment rate dropped to 6%, and the previous months’ data was revised higher.
Because the markets were closed last Friday due to the Easter holiday, the positive NFP report did not trigger significant reactions. However, at Monday’s opening, the equity markets in the United States gapped higher, revealing investors’ optimism in a faster economic recovery.
U.S. equities had a strong start of the trading week, reaching new all-time highs. The optimism surrounding the reopening of the economy continues to drive people to the stock market, as a big chunk of the received stimulus ends up invested in equities.
Oil and gold are relatively stable, trading close to $60, respectively $1,720. What happens next with the U.S. dollar is key for commodities, especially if we consider the strong rally they had in the first quarter of the year.
The Reserve Bank of Australia’s decision was the most relevant economic event today. The bank kept the cash rate at 0.1%, maintaining the accommodative conditions. However, the Australian dollar remains bid, mostly due to the risk-on environment mentioned earlier, led by the rising U.S. stock market prices.
The European and North American sessions are rather light today, as the financial community waits for the reaction to the NFP report released last Friday. Investors should keep in mind that last Friday and yesterday, the banks were closed in most of the advanced economies, so the true impact of the report should be seen in the upcoming days.
Markets to Watch
Dow Jones, USDJPY, EURGBP – markets in focus today.
Dow Jones rally continues, despite the market forming a rising wedge pattern. Before shorting, though, traders should consider that rising wedges are not always reversal patterns – sometimes, the market forms a running triangle that acts as a continuation pattern.
The USDJPY pair found support at the round 110 number, but bulls should be aware of the lack of momentum to the upside. Nevertheless, the pair remains well bid as long as it keeps forming higher highs and higher lows.
One of the strongest trends in 2021 so far formed on the EURGBP cross pair. Since Brexit, the pound rose across the board, fueled by a quick vaccine rollout as well.
Winners and Losers
The U.S. dollar loses ground to start the trading week, while equities remain well bid.