Investors and traders will be watching key macroeconomic events in the coming week to gauge the mood of policymakers, which will impact their investment strategies.

Swiss Central Bank Governor Thomas Jordan will be speaking late on Monday, followed by the Australian interest rate decision on Tuesday. Later the same day, attention will shift to the release of retail sales data for the Eurozone, with consumer morale data scheduled for release on Friday. Additionally, market participants are closely monitoring statements from several Federal Reserve officials throughout the week. Finally, on Friday, the monthly federal budget of the United States will be issued.

“The battle against inflation remains a focal point, with investors eagerly awaiting statistics on loan availability and consumer confidence. These metrics, alongside unemployment, claims data, will offer deeper insights into labour market conditions and consumer response to price hikes amid a high-interest-rate environment. The state of the labour market remains a key determinant shaping the Federal Reserve’s monetary policy decisions. Consequently, future unemployment claims statistics will provide invaluable insights into employment trends and their potential impact on inflationary pressures,” Mohamed Hashad, Chief Market Strategist, Noor Capital, said in a research note on Monday.

Last week, gold prices retraced from earlier gains on Friday following the release of the US April employment report. Despite climbing to a daily peak of $2,310, the precious metal faltered in surpassing its May 2 high of $2,326. The XAU/USD gold index concluded around the $2,300 mark, registering a marginal decline ranging between 0.02 per cent and 0.03 per cent. “The optimistic sentiment prevailing on Wall Street exerted pressure on gold’s status as a safe haven. Notably, US Treasury bond yields exhibited a downtrend, with benchmark 10-year bonds receding by seven basis points. Concurrently, US annual bond yields, which share an inverse relationship with gold prices, also experienced a decline of six and a half points, sliding from 2.219 per cent to 2.146 per cent,” Hashad said.

In oil markets, West Texas Intermediate crude witnessed a decline last week, sliding from $83.22 per barrel on Monday to $77.64 per barrel on Friday. Brent crude followed suit, dropping from $87.45 per barrel on Monday to $82.52 per barrel on Friday. “The fluctuating trajectory of black gold prices persisted, subject to both upward and downward pressures. A significant catalyst behind these fluctuations and the ensuing downturn in oil prices was the diminishing apprehension surrounding tensions in the Middle East. Positive signals regarding hostage negotiations and a ceasefire in the Gaza Strip alleviated concerns about oil supply disruptions, contributing to the recent decline in prevailing anxiety,” Hashad said.

Last week’s oil market performance was influenced by the Energy Information Administration’s revelation that US commercial crude oil inventories surged by 7.3 million barrels to a total of 461 million barrels for the week ending April 26. This marks the highest inventory levels since June 2023, coupled with a notable decrease in the refinery utilization rate to 87.5 per cent, down significantly from 90.7 per cent during the same period last year.

The April 2024 drilling productivity report from the US Energy Information Administration revealed a notable upsurge in active drilling rigs compared to April 2023. Brazil and Guyana in South America contributed to this rise in supply. Additionally, Iran’s re-entry into the market further augmented the supply side, alongside recent declarations from Libya outlining plans to ramp up oil production to two million barrels per day.

In currency markets, significant losses were incurred by the US Dollar Index (DXY), closing the North American session on Friday around the 105 mark, in contrast to the week’s opening reading of 106.093. “This decline followed the release of US employment data for April, which fell short of expectations, exerting downward pressure on the dollar and bolstering gains in gold prices, US stocks, and risk assets,” Hashad said.

The yen surged towards its most impressive weekly performance in over a year on Friday, buoyed by reports of government intervention aimed at preventing the Japanese currency from plummeting to its lowest levels in 34 years. This intervention exerted additional pressure on the US dollar, propelling the yen to achieve weekly gains of approximately 3.5 per cent. This marks its highest performance since December 2022, with traders attentively monitoring potential fluctuations amid suspicions that Tokyo intervened to bolster its currency this week, with interventions estimated at up to 9.16 trillion yen ($59.8 billion), as per data from the Bank of Japan.

According to the Bank of Japan’s minutes, the current monetary policy remains apt given prevailing economic conditions and price dynamics, with continued purchases of Japanese treasury bonds to maintain their yield at 0 per cent. It is noteworthy that during the meeting, the Council resolved to hike interest rates for the first time in two decades, thereby becoming the latest major central bank globally to exit negative interest rates in light of indications of an upturn in the inflation rate. The bank increased the interest rate from -0.1 per cent to +0.1 per cent, marking a significant policy shift.

Bitcoin

After dipping below $57,000, Bitcoin surged to $63,215 following the release of the US nonfarm payrolls data, benefiting from a surge in risk appetite and a decline in the US dollar index. Consequently, Bitcoin, along with other risk assets, capitalised on the weakened dollar.

As market participants awaited the implications of the US jobs report, which maintained the unemployment rate below 4 per cent for the twenty-seventh consecutive month, it’s noteworthy that since the Federal Reserve’s meeting on Wednesday, major Bitcoin sell-offs, orchestrated by entities known as whales, temporarily halted. “These sizable selloffs had previously rattled cryptocurrency markets for a significant period. The cessation of such operations facilitated a recovery in Bitcoin prices. Concurrently, discussions surrounding the halving event and its impact on the world’s most renowned cryptocurrency miners dwindled in prominence,” Hashad said.

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