S&P500 => The futures rise towards 4550
Oil => The commodity falls below $100
EUR/JPY => The pair rises above 13550
S&P500 looks to non-farm payroll report
The S&P500 fell back from 4600, closing the session 1.5% lower in risk-off trade after peace talks stalled and after Russia insisted on receiving payment for natural gas in Rubles or threatened to cut supply. Rising US inflation and signs that higher prices are starting to curb personal spending also hit market sentiment. Today the futures are edging higher ahead of the US non-farm payroll. Expectations are for 490K jobs to be added in March and for unemployment to drop to 3.7%. Meanwhile, wage growth is expected to head towards 5.5%, significantly below inflation. The Fed is expected to hike rates by 0.5% in May. A strong report could cement that expectation.
|US core PCE
US non-farm payroll
|Actual: 5.4% (0.2%)
Expected: 490k (9k)
Where next for S&P500?
The S&P 500 extended its rebound from 4140 the March 15 low, recapturing the 50 SMA and the 200 SMA on the 4-hour chart, before running into resistance at 4630, the weekly high. The price has fallen from the high and is currently testing support on the 50 SMA. The bearish MACD suggests that there is more downside to come. Sellers need to break below the 50 SMA at 4450 to bring 4430 into play the March 3 high and the 200 SMA at 4380. A fall below here could negate the near-term uptrend. Should the 50 SMA holds, buyers will look to retake 4630 the weekly high ahead of 4675 the January 17 high.
Oil falls on US reserves release
Oil prices have been on a roller coaster again this week. While OPEC+, as expected, stuck to a modest 430,000 barrel per day increase in output, the group resisted calls from the US and the EIA to ramp up production. Instead, the US announced that it was considering releasing more strategic reserves into the market. The US will release 1 million barrels a day into the market over six months. The steady stream of the release of oil could help keep oil prices lower for now. However, oil remains very headline sensitive, and any deterioration in the war or further sanctions could quickly send oil higher again. Today oil prices are edging lower still with more peace talks in focus, as well as the Baker Hughes rig count.
EUR/JPY rises ahead of Eurozone inflation data
EUR/JPY fell sharply on Thursday as the safe-haven yen benefited from haven demand, and the euro fell on fears over energy security, while Putin said that gas payments must be in Rubles from today. The euro brushed off strong unemployment data, which dropped to a record low of 6.8%. Meanwhile, German retail sales grew at 0.3% month on month, below the 0.5% forecast. Today, the pair is edging higher as another round of peace talks is expected to occur and as eurozone inflation data comes into focus. Expectations are for inflation to jump, and given the above forecast rise in German inflation data, inflation for the bloc could be higher than expected. Hot inflation could fuel bets of a more hawkish ECB.
|Ger. Retail Sales MoM March
EZ inflation YoY March
|Actual: 0.3% (0.2%)
Expected: 6.6% (0.7%)
Support can be found at 134.20 (May high) and 133.50 (October high).
Resistance for the pair can be seen at 137.60 (2022 high) and 139.00 (August 2015 high)