A not-so-short week is ahead. Despite the Easter holidays, the US Employment report on Friday warrants action till the last day. The Dollar lost ground again in the last week of March, ending with losses in the first quarter. The short-term trend favors Dollar’s bears, but key data ahead could trigger a correction before it resumes the downside.
Here is what you need to know for next week:
US stocks finished the week, the month and the quarter on a positive note, with solid gains, something that seemed unlikely just three weeks ago when the Silicon Valley Bank (SVB) was closed by financial regulators.
The improvement in market sentiment weighed on the US Dollar, which lost ground across the board, at a moderate pace. Government bond yields rose as volatility eased in the Treasury market.
Higher yields and risk appetite sent the Japanese Yen sharply lower, which became the worst performer, falling even against the weak US Dollar. USD/JPY rose 250 pips, to the 20-week simple moving average at 133.50 that capped the upside.
The rally in USD/JPY limited the downside in the US Dollar Index. The DXY posted the third weekly decline in a row and the lowest close since January, around 102.50.
After an inflation-focused week, attention turns to activity and employment data. The March ISM report will help see how the US economy is performing, while the ADP private employment and Nonfarm Payrolls reports will show if the labor market remains tight. Market activity could be subdued because of Easter Holidays, particularly after Wednesday.
The Pound outperformed with GBP/USD rising for the third consecutive week and consolidating above 1.2300. Among the best trades of the week was going long GBP/JPY, which gained 2.50%.
It was a volatile week for the Swiss Franc. USD/CHF approached a key long-term support and then recovered some ground, rising to 0.9150. Next Monday, Switzerland will release inflation data.
AUD/USD posted a small weekly gain as it continued to move sideways. Australian inflation numbers boosted the odds that the Reserve Bank of Australia (RBA) will remain on hold next Tuesday.
NZD/USD rose during the week but once again found resistance around 0.6300. The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on Wednesday.
The Canadian Dollar caught up after lagging for weeks. USD/CAD lost 200 pips, to settle around 1.3540. CAD/JPY rose by 3.35%. Next Thursday, Canada will release its monthly jobs report.
Gold posted another weekly decline as the yellow metal struggles to reclaim the $2,000 level. On the contrary, Silver rose for the third consecutive week, reaching $24.00.
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