The March jobs data is due next week, but developments in Ukraine, oil prices, and an inflation report are expected to move the market. The March jobs report and personal consumption expenditures statistics highlight a busy economic agenda in the coming week. Data on consumer confidence and housing prices will be announced Tuesday.
Overall, markets will be driven by headlines, whether economic statistics, Ukraine news, or crude oil futures. The US stock market has fluctuated, but it is now higher for March. On Friday, the S&P 500 was up about 3.9 per cent for the month.
The PCE contains an inflation metric that the Fed constantly monitors. Economists anticipate a 5.5 per cent increase in core PCE inflation.
Geopolitical tensions have taken another ugly turn over the weekend as President Joe Biden said President Putin could not remain in power. Traders are already nervous about Kremlin’s previous remarks where they showed their anger towards the US after Biden labelled Putin a war criminal. Now the end of his sweeping speech in Poland, he said, “a dictator, bent on rebuilding an empire, will never erase the people’s love for liberty,”. “Ukraine will never be a victory for Russia, for free people refuse to live in a world of hopelessness and darkness.”
For investors, this means that they need to be ready for a counter-reaction from Russia or even a much higher intensity of invasion on Ukraine. The biggest worry for traders is that the US has gone too far, and it is inching closer to a direct conflict with Russia, which would be nothing short of Armageddon.
The crypto king, Bitcoin, had a more positive weekend as bulls were in control of the price. But it is important to emphasize that a bull rally is unlikely to begin unless we see the bitcoin price breaking above the 50K price, which is a more meaningful resistance.
In terms of regulations, all eyes will be on the UK as there are several reports that the UK will soon reveal plans to regulate the digital coin market. There is no doubt that the UK has lost its charm in adopting innovation compared to the UAE, where regulators took the right initiative and measured risk to regulate cryptos. Now that part of the world is experiencing phenomenal growth and attracting the most capital. However, the British Finance Minister Rishi Sunak is finally going to make an announcement this week or the next to announce a new regulatory regime for cryptos.
Institutions have only adopted Bitcoin and other cryptocurrencies because they like that this space is getting more regulated. This provides a safety net for consumers and lowers the chances of sham projects hitting the market.
In terms of price action, watch the Bitcoin making its way towards the 50K price level, and once this resistance is broken, we are highly likely to see serious upward momentum.
Oil prices are also likely to remain highly volatile as the US has further tightened the drip around sanctions on Russia. However, energy producers are becoming tired of having one currency system to price oil. Recent headlines suggest that there is an active movement towards not exploring the dollar as the benchmark currency but other parallel currencies such as the Chinese Yuan or even Bitcoin.
Gas prices have seen a serious upward move in the past week, and the price will likely continue its upward journey. This is because the EU’s deal with the US is minuscule. The EU’s gas consumption via the pipeline from Russia last year was 155 bcm. If the region thinks that it embargo the Russian energy because it has a deal with the US, that certainly raises many alarm bells among traders and investors.