By Tad DeVan, Senior Currency Strategist, MTI
Week of: 03/28/22 – 04/01/22
It’s Wednesday and we’re back with our weekly Forex update.
A lot’s going on in the markets this week – Russia is nearing one of its bond repayments, the U.S. labor market is seeing a historic shortage, and oil prices are on the move.
A World Bank economist said the Russia-Ukraine war has exacerbated things for some developing nations and may trigger a debt crisis. The pandemic already has worsened things for these economies and raised their total indebtedness to a 50-year high.
That’s worrisome as a rising interest rate environment by the Fed will add further stress for these countries. Why? Because the poorest countries have taken on an increasing amount of variable-rate debt as a share of their total debt. And this increases their vulnerability to interest rate hikes.
Meanwhile, data released this week showed job openings in the U.S. barely fell last month as the labor shortage remained historically intense. Job openings fell to 11.3 million, its lowest since December.
In the commodity space, crude oil saw volatility as prices fell earlier during the week but recouped losses after the American Petroleum Institute (API) estimated there was a draw of 3 million barrels this week. Concerns, however, remain as China has shut down its financial hub in Shanghai to curb rising coronavirus cases.
Taking cues from the above developments, major currency pairs saw some big moves this week.
- The U.S. Dollar Index (DYX) saw losses this week as reports regarding Russia-Ukraine peace talks have lessened the greenback’s safe haven appeal.
- The euro, on the other hand, gained on hopes for a breakthrough in peace talks.
- The pound also saw some gains.
- The yen hit a seven-year low this week against the dollar as the Bank of Japan (BoJ) continued to ease monetary policy aggressively and offered to buy an unlimited amount of 10-year government bonds for three days this week.
- The ruble climbed back to its pre-invasion levels and the controls imposed by Russia’s central bank are also helping this rally.
- At the time of writing, the DYX stood at 97.74 (down 0.67%), while the euro (EURUSD) was trading at $1.1160 (up 0.65%).
- The yen is currently trading at 121.97 per dollar (down 0.73%).
The focus for the rest of the week would be on Russia and Ukraine talks as Russians have agreed to scale down military operations around Ukraine’s capital. And Ukraine has proposed adopting a neutral status in a sign of progress at face-to-face negotiations in Istanbul.
Then we have the U.S. official non-farm payroll data which will be published on Friday. Economists are expecting a headline total that represents 485k new jobs and a headline unemployment rate of 3.8% (let’s see how that pans out).
And lastly, traders will be tracking Thursday’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies for cues about any increase in oil output.
I know, it’s crazy out there – and the markets are moving with every news flow, making it a more challenging environment for traders.
However, times like these can offer the best opportunities in the markets to traders who take action.
Just join a free webinar hosted by the Market Traders Institute where you will learn how Forex experts navigate these early signs of opportunities.
And if you are new to the Forex market, download this FREE ebook to know how you can avoid some beginner trading mistakes.
I hope to see you on the other side!
Have a safe and profitable trading week! 😀