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Markets are awaiting NFP data – will it make or break the week?

Traders' sanity hangs by a thread as the Friday's NFP jobs data will reveal what could come next in regards to hikes.

A bad day to be a financial institution

Anticipation of Friday’s Nonfarm Payrolls data pulled the US markets down. On top of NFPs, Wall Street fell dramatically on Thursday, as US bonds climbed. However, initial jobless claims surprisingly increased to its highest level in 10 weeks, eliminating some wagers on a 50 basis point Fed rate move.

The S&P 500 fell on Thursday, weighed down mainly by a decline in banking stocks led by SVB Bank. Many are on their toes ahead of Friday’s employment data, which most believe will be strong and signal the resumption of aggressive Fed rate rises.

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SVB Financial Group fell over 55% after the institution disclosed a $2.25 billion equity raising. It also reported a $1.8 billion net loss and negative annual and first-quarter projections due to the effect of rising interest rates.

The shares of Bank of America, Wells Fargo, as well as JPMorgan all dropped more than 5%. Crypto bank Silvergate Capital plunged more than 42% following a $1 billion loss in the fourth quarter and announcement of backupy. The S&P 500 decreased 1.6%, while the Dow Jones decreased 1.5% and the Nasdaq decreased 1.8%.

SVB

SVB Financial Group 1H chart, source: tradingview.com

US dollar is stepping aside ahead of big data

The decline in US yields continued during the US trading session. The 2-year rate fell to 4.95% while the 10-year rate decreased to 3.92%. The decline in yields depreciated the US dollar. The dollar index retreated for the second consecutive day, dropping to 105.20. This may yet be a correction of the big dollar increase following Powell’s testimony.

The EUR/USD increased for a second session yet failed to reclaim 1.0600. GBP/USD had its best day of the week thus far, reaching a two-day high of 1.1937.

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Bank of Japan governor Kuroda, will announce the central bank’s monetary decision as the governor’s last action  (no change is expected). His 10-year tenure concludes on April 8th, after he’s served for ten years. USD/JPY fell by more than 1% on Thursday, returning to 136.00.

Commodities are mixing up the game

Gold surpassed $1,830 per ounce, closing at $1,835 with 0.9% in the green, aided by reduced yields. Silver failed to maintain its gains and fell to the lower end of $20 to $20.125 with 0.13% in the red.

On Thursday, crude oil prices declined for a third consecutive session due to uncertainty over February’s nonfarm payrolls increase. The likelihood that the Fed will increase interest rates by 50 basis points at its March 22nd meeting is proportional to the rise of the NFP.

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WTI, finished at $75.72 a barrel, down 94 cents, or 1.2%, following a 4.7% decline over the previous two sessions. Brent crude traded in UK closed at $81.59, down $1.07, or 1.3%. The benchmark for global crude sank 4.1% during the previous two days.

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

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