The Week Ahead 📈 28th march – 1st april: Putin at the G20

PocketOption · Mar 30, 2022, 05:36 am

The Week Ahead 📈 28th march - 1st april: Putin at the G20

Hello, welcome to the Key To Markets preview of the Week Ahead.

The big market moves have been a falling Japanese yen and rebounding stocks. The week ahead sees the end of the first quarter of 2022 with non-farm payrolls ushering in the new month alongside the G20 meeting where n President Putin could make an appearance.

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Currency Pair Performance

5-day performance as of March 24, 2022. 18:00 GMT

Source: finviz.com

10 Big Stories Last Week

Chart of the Week

Source: FRED / Federal Reserve

The above chart shows US Federal Government debt in red and the fed funds rate in blue.

"We now look for the Fed to raise rates by 50bp at both its May and June meetings, with 25bp rate hikes pencilled in for each meeting over the balance of the year... a start to QT in May, and see three further hikes in 2023, taking the fed funds rate to a likely peak at 3.0%" – Morgan Stanley

In 2018 the market sold off when the Fed funds rate approached 2.4% with US debt at $22 trillion & the Fed was forced to cut rates 3 times in 2019. Now the debt is at $30 trillion. Can the Fed really reach 3% interest rates without a market sell-off?

Economic Calendar Highlights

Source: FX Street

5 Things to Watch This Week

1) G20 Meeting

Global leaders will meet next week and 's Vladimir Putin will reportedly attend. While some, including US President Joe Biden, has said should be booted out of the group, any vote would likely be vetoed by clothes like China and India. The global confab will only have meaning for markets if it comes with tougher new sanctions on 's energy exports.

2) NFP

The March non-farm payrolls report follows the blow-out positive surprise figures for February and the 1st rate hike from the Federal Reserve since 2018. Expectations are for a rise of 450K after the 678K previously. The USD has been mixed over the past fortnight, rising vs the yen but falling versus commodity currencies.

3) OPEC

Oil prices were climbing again over the past week on fears that the war in e will continue to put supplies at risk or that will cut off its exports to the rest of Europe. OPEC+ that includes will likely continue raising output at the same pace, offering no extra relief to the supply shock.

4) Japanese yen

USD/JPY hit 120, while the GBP/JPY, AUD/JPY and CAD/JPY crosses all reached fresh 6-year highs amid a rout in the Japanese yen since the March BOJ meeting. Traders are pricing in continued monetary easing in Japan versus tightening plans elsewhere as well as less of a need for a haven as sentiment improves.

5) Economic data: PMIs

The first set of PMIs since the invasion of e will be instructive for the global economy and could play an outsized role in risk sentiment. Risky assets have rallied over the past two weeks but could come unstuck over any resulting economic uncertainty.

Technical Analysis

Here you can find an analysis of the major asset classes including the major forex pairs, gold, oil, and the S&P 500.

EUR/USD (H4 Candlestick Chart)

EUR/USD failed to break over resistance at 1.113, which would be needed to negate the overall bearish trend. The price dropped back to test support at 0.095 three times in what could lead to an eventual break lower and a possible re-test of the YTD lows around 1.08.

GBP/USD (H4 Candlestick Chart)

GBP/USD broke through 1.32 resistance but only made it as far as 1.33 before support from the late Feb and early March lows turned to resistance. A drop back under 1.32 suggests the bullish retracement of the larger downtrend could be over.

USD/JPY (H4 Candlestick Chart)

USD/JPY extended its relentless uptrend that started the week prior, reaching over 122. A bigger pullback or a longer pause will be necessary soon but at the current pace, the pair could reach 125 in days.

AUD/USD (H4 Candlestick Chart)

AUD/USD broke above 0.744 resistance from the March 7 peak, extending gains up to the 0.75 round number. A move back under the 0.744 resistance would be needed to negate the uptrend.

USD/CAD (H4 Candlestick Chart)

USD/CAD has broken down out of its sideways trading range and looks set for a test of YTD lows at 1.245. The chart looks bearish while it remains under 1.27, with the possibility of a new downtrend should the 1.245 get taken out.

Gold (H4 Candlestick Chart)

XAU/USD held its 200 SMA for a second time without any need to retest 1900 before breaking the March 17 peak at 1950. Momentum looks to have turned bullish but that would be negated by another close back under 1950.

Brent Oil (H4 Candlestick Chart)

BRENT rallied strongly off 95 to touch 120 briefly before pulling back again under 115. The trend has flipped positive short term but could reverse again if the broader trend is turning sideways as we suspected last week.

US 500 (H4 Candlestick Chart)

US500 did break out over 4400 as we suspected last week and is now in a new short term uptrend that could unwind quickly if judged to be a 'bear market rally'. A drop under 4400 would negate the new bullishness, while 4600 is the next upside target.

Thank you very much for reading - and have a great week trading!

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