S&P 500 Prepares For Seventh Consecutive Weekly Gain

Great week for US and European equity markets. What will the NFP day bring?

NFP day has arrived – what the markets have been waiting for all week. It was a typical NFP week so far, with ranges dominating the currency market, even though the US dollar traded with an offered tone during the last two days.

The EUR/USD pair’s price action had a positive day on Monday, followed by full retracement on Tuesday. It consolidated on Wednesday, only to bounce back to Monday’s highs a few hours before the NFP on Thursday. This kind of price action is very common during the NFP week.

Stocks react well to low volatility levels and ranges on the currency markets. As such, the Dow Jones posted a new all-time high yesterday, after breaking higher after a triangular pattern on the daily chart.

European stocks had a great week, too. The FTSE100 finally found the strength to push above the 7,000-point level, the Spanish IBEX rose above 9,000 points and the German DAX sits comfortably above the 15,000 mark.

Commodities extended their rally, with Gold breaking higher in the past twenty-four hours as it regained the $1,800/oz level. Fears of inflation in the United States have led to investors selling the dollar and preferring alternative investments. Corn, copper, lumber, food, and house prices are all moving in the same direction – upwards.

Weekly Analysis

Today it is all about the jobs data in the United States and Canada. Out of the two, the US jobs numbers will have the biggest impact on financial markets.

It is still early in the trading month, so today’s report is key for further developments in May.

The forecast is that the United States economy added around one million new jobs in April. Some estimates point to two million, but the average is more moderate.

Considering the strong economic recovery, the bias here is that the number will exceed expectations. In this case, stocks should remain bid. The big question is – what will the US dollar do? On better data, it should rise, but better data also fuels expectations of an overheating economy, which means higher inflation, thus a weaker dollar.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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