Dollar Advances Ahead of US Labor Market Data
01 April 2022
On Friday morning, traders bought the USD, with US stock markets trading flat and commodities falling heading into today's headline macro data.
Later today, the Eurozone's HICP indicator, a significant way to measure changes in purchasing trends and inflation in the Eurozone, will be released, expected to rise further to 6.6% yearly in March, up from 5.9% in February. Nevertheless, the ECB is still not ready to raise rates. As a result, inflation will soon destroy part of the euro bloc.
However, investors will pay the most attention to the US labor market data. The non-farm payrolls number (new jobs in the US) is expected to print 490,000 for March, down from 678,000 in February, but still a solid figure. As a result, the unemployment rate will likely improve a notch to 3.7%. Moreover, wage growth is seen accelerating further in March but is still below inflation. Thus, real wages are declining.
Volatility will likely be elevated after the data. However, the release should help markets cement expectations around two 50bp hikes in May and June, which could further support the dollar, economists at ING report.
In other news, the WTI oil dropped below the 100 USD threshold as the US administration is working on a plan to release up to 180 million barrels of oil from its Strategic Petroleum Reserve over the coming months. At the same time, gold, silver, and copper declined, but they continue to jump up and down as investors can't decide which way the new trend will be.
Additionally, there are more peace talks between Russia and Ukraine today, likely causing some optimism in the markets.