The reaction of the currency markets to the very positive US employment data last Friday was quite weak, which is due to the holiday (Good Friday), before Easter. As a matter of fact, the financial markets in Europe and North America were closed.
This Monday, the markets reacted with the strengthening of the US dollar during the Asian session, but this is not very significant, since it is still a holiday both in Europe and in China today. On the other hand, the US market is open today. So, we should expect noticeable movements in both the currency market and the stock markets during the American trading session.
Now, let's discuss the published economic statistics from the US labor market. The number of new jobs really turned out to be higher than expectations, rising for the first time in six months. It is near the mark of 1,000,000 new jobs. Based on the presented data, the US economy received 916,000 new jobs in March against the forecasted growth of 647,000 and upward revision to 468,000 in February. In this case, the unemployment rate declined from 6.2% to the estimated 6.0%.
This is clearly impressive data, but the markets already expected this. There is no doubt that it was hard for investors to imagine the real number of new jobs that appeared in the country's economy, but they were all well aware that after last year's collapse amid the massive vaccination of the population and stimulus measures for the citizen and business, there would be a surge in the number of new jobs, which was recently seen.
How will the stock markets react to this news? We believe that it would be optimistic. Stock index futures are trading in positive zones in both Europe and the US. The main European trading platforms will be closed today, but the United States will open, where the reaction to Friday's data will be certainly positive. For tomorrow, we should expect the same reaction in Europe and in the Chinese stock market.
In terms of the dynamics of the stock market, the US dollar is expected to receive support today, albeit minimal. This is because investors are focused on the recovery of economic and business activity in the US and other economically strong countries, which will clearly put counter pressure on the dollar rate as a funding currency. However, one should not expect it to decline, as the continuous growth in Treasury yields supports its rate. In fact, the two opposing forces, both negative and positive for the dollar, balance it. Due to this, a sharp and significant increase, as well as a fall in its rate, cannot be seen.
The current dynamics of the US dollar is expected to receive support.
Forecast of the day:
The EUR/USD pair is trading below the level of 1.1750 on the wave of positive recovery of the US employment data. We believe that the pair will be under pressure today and may fall to the level of 1.1700, with a further prospect of a decline to 1.1650.
Spot gold is consolidating above the strong support level of 1720.00. If this mark holds amid the positive mood prevailing in the markets, it will have to break through the level of 1730.00 and further rise to 1755.00. However, such a scenario can only happen if the dollar's strengthening turns out to be local and generally small. But if Treasury yields continue to actively rise, then gold will decline again below 1720.00 mark and further to 1700.00.