Oil plummets after SPR release

“Success is not final; failure is not fatal: it is the courage to continue that counts.” – Winston Churchill

 

 

HEADLINES

 

 

• Dollar eyes 2.8% quarterly gain as safe-haven flows support
• PRECIOUS-Gold falls 1% after strong U.S. jobs data, firmer dollar
• Russia accounts for nearly 40% of German January oil imports -data
• U.S. stocks, bonds flash diverging signals as volatile first quarter ends
• USD/CAD: Looine to strengthen further – MUFG
• GBPUSD Near Term: Downside favoured

 

 

FOREX

 

 

Dollar eyes 2.8% quarterly gain as safe-haven flows support

 

 

The dollar rose on Thursday as a lack of progress in peace talks between Russia and Ukraine boosted demand for the safe-haven currency and as the United States announced the largest release ever from its emergency oil reserve to try to blunt the energy shock from the war.

The dollar has attracted safe haven flows since Russia's Feb. 24 invasion of Ukraine and is on track for a rise of around 1.6% for the month of March, and around 2.8% for the first quarter.

 

 

COMMODITIES

 

 

Gold falls 1% after strong U.S. jobs data, firmer dollar

 

 

Gold retreated on Friday and was set to post a weekly decline after robust U.S. jobs data drove the dollar higher and bolstered bets that the Federal Reserve would aggressively raise rates. While geopolitical crises do not last forever, we expect the secondary impacts of the Russia-Ukraine crisis to provide a strong level of support for gold prices this year.

 

 

U.S. oil notches biggest weekly loss since 2020 after stockpile release

 

 

Oil extended losses on Friday as members of the International Energy Agency (IEA) agreed to join in the largest-ever U.S. oil reserves release. After U.S. President Joe Biden announced the release on Thursday, prices slumped 7%. Both benchmarks notched their worst weekly performance since April 2020.

 

 

STOCKS

 

 

Dow climbs more than 100 points as Wall Street begins second quarter on a positive note

 

 

Stocks were modestly higher on Friday as investors assessed a new quarter of trading and a troublesome bond market recession indicator. The gains for stocks came on the first trading day of April and the second quarter. Wall Street is fresh off its first negative quarter in two years, but there were positive signs for investors on Friday.

 

 

U.S. stocks, bonds flash diverging signals as volatile first quarter ends

 

 

With the first quarter of 2022 over, the U.S. stock and bond markets appear to be conveying drastically different assessments of the growth outlook, leaving investors to decide which view will prevail. Though policymakers have said they could raise rates by as much as 50 basis points in a single meeting if warranted and investors are pricing in some 200 basis points of tightening this year.

 

 

ANALYSIS

 

 

USD/CAD: Looine to strengthen further – MUFG

 

 

“The Canadian dollar strengthened in March along with AUD, NOK and NZD with the consistency being the obvious commodities linkage. These four currencies outperformed the US dollar while the rest of G10 depreciated. Mineral fuels, precious metals – mainly gold, timber, minerals and aluminium made up 5 of Canada’s top 10 exports, accounting for nearly 40% of exports.”

 

 

“USD/CAD was held back from steeper falls by the move in the US-CA spread in favour of the US dollar – the spread jumped by 18bps in March given the scale of shift in expectations for rate hikes by the Fed. Given Canada’s linkage to the US, moves in the 2yr spread tends to have a greater influence.”

 

 

CHART

 

 

GBPUSD Near Term: Downside favoured

 

 

Technical View: Short position below 1.322. Target 1.306. Conversely, break above 1.322, to open 1.326.

 

 

Comments: The pair remains under pressure. Further weakness favored.

 

 

Source: Trading Central
 

CALENDAR

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/business/euro-holds-one-month-high-yen-set-worst-month-since-2016-2022-03-31/
https://www.reuters.com/article/global-precious/precious-gold-falls-1-after-strong-u-s-jobs-data-firmer-dollar-idUSL3N2VZ2UX
https://www.reuters.com/business/energy/russia-accounts-nearly-40-german-january-oil-imports-data-2022-04-01/
https://www.reuters.com/business/finance/us-stocks-bonds-flash-diverging-signals-volatile-first-quarter-ends-2022-03-31/
https://www.fxstreet.com/news/usd-cad-looine-to-strengthen-further-mufg-202204011615
https://www.cnbc.com/2022/04/01/oil-markets-international-energy-agency.html
https://www.cnbc.com/2022/03/31/stock-market-futures-open-to-close-news.html