Final week of Q1

TAKEAWAYS

•    US dollar is top Forex riser for the week, NZD/USD the weakest
•    EUR/USD closes week under 1.18, near 4-month low
•    USD/JPY breaks out of trading range to test May 2020 peak
•    COT Report: Speculators add to JPY shorts
•    Gold gained $6 per oz on Friday but ends the week basically flat
•    S&P 500 rallied 1.66% on Friday, taking it to a record high
•    Nasdaq closes 5th week lower in 6 as rotation out of tech continues 
•    Bond yields close the week lower with the US 10Y yield losing 5bps
•    US February core PCE data misses at 1.4% vs. 1.5% Expected
•    After a volatile week thanks to the Suez tanker crisis, oil price ends week -1%
•    Archegos Capital blow-up behind mysterious Friday ‘block trade’ sales in some stocks
•    WEEK AHEAD: Potential end of quarter rebalancing effects

BEST CHART
USD/JPY – Daily Candlesticks

 
Source: GKFX / MT4 (March 29, 2021)

USD/JPY has broken out from its 3-week consolidation and in now testing the peak reached in May 2020 at 109.85 – just short of the big 110 level.

GURU WISDOM

“Buy & hold stock in companies where you love the product roadmap, sell where you don’t." – Elon Musk

MARKETS

*Daily closing price
↗ EUR/USD    1.1796        (+0.27%)
↗ GBP/USD    1.3795        (+0.40%)
↗ USD/JPY    109.15        (+0.43%)
↗ S&P 500    3974.54    (+1.66%)
↗ Hang Seng    28,336.43    (+1.57%)
↗ Gold        1731.97    (+0.30%)
↗ Oil (Brent)    68.77        (+4.23%)
↘ Bitcoin    55,022.8    (-1.54%)

NEWS

The dollar continued to gain ground in the last week – and the strength came despite a less favourable backdrop in other asset classes. Bond yields fell and stocks gained but the dollar still held its own. There were many Fed officials speaking throughout the week with Fed Chair Powell testifying to Congress and others attending a virtual meeting held by the Bank of Internal Settlements (BIS). 

Most Fed speakers admitted there was likely going to be some inflation in the near term, which they believe will be temporary. The idea of higher US inflation, coupled with the lowest weekly jobless claims since the pandemic aided the dollar. Meanwhile, the EUR/USD fell under 1.18 amid the dollar strength and as many European countries tightened covid restrictions because of rising virus cases. Gold ended the week only slightly lower, despite the USD strength. 

Block trade sales from an unknown hedge fund in some Chinese tech and US media companies caught investors’ attention. The fund was named later as Archegos Capital, founded by Bill Hwang who more famously ran Tiger Asia. Despite big falls in certain stocks, the major indices finished at record highs. The exception being the Nasdaq, which closed down for a 5th week out of 6 as investors continue to sell tech stocks and buy into stocks that will benefit from the economic reopening.  

DAY AHEAD 

*Times in GMT
08:30 – UK Mortgage Approvals (Feb) [96 K Exp vs. 99 K Prev]
23:30 – Japan Unemployment Rate (Feb) [3 % Exp vs 2.9 % Prev]
23:50 – Japan Retail Trade (YoY)(Feb) [-2.8 % Exp vs. -2.4 % Prev]

Source: TradingWriters.com