NonFarm Payrolls Behind Closed Doors

A magical ending of the week with Good Friday celebrations in Europe and in the United States amid low liquidity. The major magical present of the week is the 4000 point landmark achieved by the S&P 500 index, a top stock indicator in the world.

Incredible all time record in time of the global pandemic. It seem that investors are navigated by the positive macroeconomic data leaving behind all alarming signals of the debt market in the United States. You may easily understand the elegance of their logic as the U.S. Administration is promising more and more investments in the American economy in coming years, and it’s quite to resist pressing the “Buy” button. What is most important is not to forget that vast government spending has the other side of the coin, which promotes rising taxes and interest rates – everything that the stock market can’t stand the sight of.

But so far investors are celebrating and we may gaze at the economic calendar to find the NonFarm Payrolls report on Friday. The consensus over the labour data for March is quite positive. American economy is expected to create 647,000 new jobs outside agricultural sector. Immense numbers that is amplified with the forecasted decline in unemployment to 6% from 6.2% in February. A minor exclusion is the hourly earnings data that is expected to rise by 0.1% only after 0.2% in the previous month.

Our statistical modeling confirms these expectations with NonFarm Payrolls at 602,000-628,000, unemployment at 6.0-6.1%.

Market reaction on the labour market data would be muted, low liquidity would prevent any significant volatility. So, major market instruments are likely to remain on current positions until next Monday.

The S&P 500 broad market index is ending this trading week in the vicinity of 4000 points, but lower than the next resistance level at 4040 points. So it would be particularly interesting to see the technical picture of the next week, especially after windows dressing in the last day of March.

Oil market is looking tense after OPEC+ meeting on Thursday. The OPEC+ has decided to lift crude production by 350,000 barrel per day in May and June, following additional rise of production by 450,000 bpd in July. This is a middle-ground decision, which is a little behind disputed 500,000 bpd increase in production each month, but not satisfying for oil producers that expressed concerns over fragile oil market at the moment. Brent crude prices jumped above the resistance level at $64.30 per barrel, but still looking weak with a possible downside to $62 per barrel, and further down to $60 per barrel.

Gold prices returned to more reasonable levels at $1730 per troy ounce after a brief spike below $1700 per ounce. Declining yields of 10-year Treasuries to 1.68% helped gold to regain ground. However, rising interest rates and the pressure on gold prices may resume shortly considering vast government spending programs. As the moment it is quite difficult to say where the rebound of gold prices may end.

Foreign exchange market has not changed significantly from the beginning of the week with an exclusion of the USDJPY, which finally reached the resistance level at 110.50 and is trying to form a reverse pattern to descend to 106.50. The EURUSD is closing the week between the support at 1.15300 and the resistance 1.19400. The Cable is also fluctuating in the range of 1.36100-1.39700.