American Employment Week, Inflation and Canadian GDP

More than a year after the pandemic we will have the result of the American employment data on April 1. Unemployment is expected to fall to 3.7% thanks to the recovery of all sectors of the US economy and the rise in interest rates last March. The commitment of the Federal Reserve remains firm with the proposed plan for this year. Recent comments from Fed Chairman Jerome Powell underscore the risk of a 50bp hike at the next FOMC meeting (May 4). It seems that a consensus is forming, and the market recognizes it.

Before we get to the March employment report on April 1, the United States has a full list of economic releases. They include a preliminary estimate of February’s merchandise trade balance, which is likely to remain close to a record deficit set in January ($107.6 billion). Investors may be more sensitive to the February personal consumption and income reports and the associated deflator. The Fed is targeting the main PCE deflator, and it is expected (median forecast in the Bloomberg survey) to rise to 6.4% from 6.1%. The core measure, which officials are talking about but not formally targeting, is expected to rise to 5.5% from 5.2%.

Fed funds futures have almost an 80% chance of a discounted 50bp move. The market also appears to be strongly favoring a 50bp hike in June. The ECB is on hold until at least the end of this year. The BOJ’s efforts are likely to be further complicated as inflation will pick up soon, but the economy is weak. It may be forced to defend its 0.25% yield curve control cap on its 10-year bond.

Market projections for FX and commodities market

EURUSD closes its month of March on the post-conflict buy basis. Buyers between 1.09 and 1.0950 remain in the market with an eye on take profit around 1.10. The highs of this cross have not remained bullish during this last week, which leads us to suppose that April prices could remain below 1.11 as well. The strategy will remain different compared to March. We will buy around 1.09760 and 1.0950 with tolerance up to 1.0930. Take Profit would be done between 1.10 and 1.1010 for the coming week.

GBPUSD remains below the 1.32 buyers and above the post conflict base buyers. Buy prices remain between 1.3180 and 1.3170. Take profit levels become 1.32 and 1.3210 for next week.

USDJPY will hold for a new week higher. Kuroda’s ultra-loose monetary policy will keep the Japanese yen low for quite some time. Above 122.00, buyers remain in the market until 122.30 and 122.50. No sell strategies are expected at this cross.

USDCAD remains with short strategies below 1.26 and 1.25. The preference is short with new falling levels around 1.2470 and 1.2460. Buyers will come in from 1.2460 and 1.2450 it is important to consider sell expirations at these prices and it is not ideal to hedge once these lows are reached.

SP500 remains buyer above 4500 until 4600. It is possible that the performance of the index advances to the next take profit levels of 4700.

Commodities gold and silver remain with buy strategies. Buying prices for gold are between 1900.0 and 1915.0. Take profit levels between 2000.0 and 1950.0. We could assume that post-conflict buyers are not the same as they are now and possibly we will have the maximum of 2000.0 an ounce defined for this year. In silver the situation is the same, the strong buyers are between the 24.50 and 24.0 levels.