The NFP broke the bank – Market Analysis – April 3

The NFP broke the bank – Market Analysis – April 3

Horrendous NFP figures bring uncertainty in the market

Although the Non-farm Payroll figure was significantly lower than expected, -701k vs. 100k, and the unemployment rate rose to 4.4%, the US Dollar continued to strengthen against the major currencies.

FX status quo

EUR/USD touched 1.0774, close to the theoretical target of the reversal pattern that was triggered on April 2.

In the same way, GBP/USD drilled its support at 1.2300 and fell to 1.2200. These are all movements of the assets that are having a behavior highly linked to technical analysis criteria.

We mentioned that there were saturation conditions in some pairs, specifically in the oversold EUR/GBP, which has corrected upwards due to this circumstance.

The same happened with the USD/JPY pair that, after a reversal pattern that can be seen in the chart, corrected downwards at the end of the day, a movement that may continue at the beginning of the week with the first level of support in the area of 107.85.


In the case of USD/JPY and in general, in all crosses of the Yen, the downward pressure could be resumed at any time if the situation of the stock market decline continues, and therefore the risk-off mode increases in the market.

The indices

The North American indices remained in red throughout the session on Friday, they were only supported for a time by the best figure of ISM non-manufacturing for March, 52.9, still in an expansion zone. However, the consensus is that this figure does not yet reflect the negative impact of the crisis, and the next numbers will be significantly lower.

The commodities

Crude returned to have another day of sharp rise due to the news that OPEC+ has the purpose of reaching an agreement in which it wants to include the United States, Canada, and other non-cartel countries to reduce production. The main problem for this initiative to be successful is the resistance of countries, not only Russia, but external countries to limit their oil extraction.

There is still a high level of uncertainty and skepticism about it, but given the possibility, albeit minimal, that an agreement can be reached, a large part of speculative short positions have been closed and have led Brent Oil to new highs at $34.50.


If a production cut of 10 million barrels per day were to be finally agreed, the price could rise a little more from these levels to the $40 zone, but if the meeting or meetings fail, the oil will return to the starting levels at $25 and with downward pressure, say most market analysts. Due to the massive decline in market demand that will inevitably continue for a considerable time.

In this economic crisis scenario in which central banks around the world have flooded the financial system with liquidity in amounts never before seen; and in which they may need to continue increasing intervention amounts, GOLD will continue to be a preferred asset for investors. The precious metal is considered a hedge against inflation (something that we will not see in the short term) but also against the loss of value of fiat money. The more the money supply increases, and that is what is happening, the higher will be the appetite of investors for GOLD.

As we observe in the chart, after breaking upwards, a price concentration zone has an open path up to the 1630 and 1640 regions as the closest targets.



Sources: tradingview.com

By: Miguel A. Rodriguez Ruiz

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