Weekly Market Review - April 1-5
The week that ends on April 5 has been less volatile compared to the previous week, with EUR/USD slightly increasing 0.10% for the week. The British pound has added 0.22% so far against the US dollar after UK Prime Minister Theresa May asked for another Brexit extension.
The cryptocurrency market surprised investors with a sudden surge led by Bitcoin, which gained over 20% on Tuesday and exceeded the $5,000 level the next day for the first time since November 2018.
Here are the most significant events that caught investors’ attention:
German Industrial Order Defy Expectations
Industrial orders in Germany demonstrated the biggest monthly drop in more than two years in February, mainly because of weaker foreign demand. Thus, contracts for goods fell 4.2% compared to a decline of 2.1% in January, which was revised down from -2.6%. The February slump came despite analysts’ expectations of a 0.3% increase. Economists are worried that Germany still suffers from Brexit issues and global uncertainties.
US Jobless Claims Fell to 50-Year Low
The weekly figure of new applications for unemployment benefits in the US surprised economists with a decline to the lowest level in about 50 years, which proves that the situation of the labor market is not as bad as other recent reports hinted. The initial jobless claims last week fell by 10,000 to 202,000, which analysts anticipated an increase to 216,000. The four-week moving average, a more accurate indicator, was 213,000, down 4,000 from the previous week.
US Private Sector Adds Only 129,000 New Jobs
On Wednesday, the ADP National Employment Report showed that the US private sector added only 129,000 jobs last month, which is below analysts’ expectations and the lowest figure since September 2017. Economists anticipated an average gain of 170,000 new jobs. February data was revised up to 197,000 from the initially reported gain of 183,000. The nonfarm payrolls report on Friday will have the last word after the disappointed ADP report and the positive initial jobless claims data.
Ultra-Low Interest Rates Discussed at The ECB Meeting in March
The European Central Bank (ECB) discussed the potential risks of its ultra-low interest rates to banks, according to the recently published minutes of the March meeting. Concerned over the steep slowdown in eurozone’s economic growth, the ECB delayed the planned rate increase until 2020 and is now letting banks to benefit from ultra-cheap funding from the central bank. Some policymakers are worried about the long-term effect of low rates, which could depress banks’ profitability and interest margins.
US Mortgage Applications Jump About 19%
The Mortgage Bankers Association reported on Wednesday that the mortgage applications in the US surged to the highest level in over two and a half years, driven by a jump in refinancing activity. Also, home borrowing costs fell to the lowest levels in over 12 months. The index related to requests for loans to purchase a home or refinance one jumped last week by 18.6% to 503.6, the highest level since October 2016.
Billionaire Ray Dalio Concerned About US Economy
Ray Dalio, founder of hedge fund Bridgewater Associates, said on Thursday that the increasing income inequality in the US, along with low investments in public education, posed an existential risk for the economy and the US in general. The billionaire is worried that capitalism is failing in the US and is calling for increased investments in early childhood education, infrastructure, and public health.
Upcoming News to Watch
Next week, the US will come with several important updates on economic indicators. Thus, on Tuesday, the Bureau of Labor Statistics will publish the JOLTs job openings. On Wednesday, investors will find out the consumer price index (CPI) changes and FOMC meeting minutes. US production price index (PPI) is scheduled for Thursday. The US will end the week with import and export price index reports.
On Wednesday, the UK will report on its economic growth in annual and monthly terms. Also, the country will publish its industrial and manufacturing production, as well as its trade balance changes for February.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.