The global financial market was in a state of flux last Friday, as the release of the U.S. jobs report sparked a chain of events that sent ripples through various asset classes. The report showed a significant increase in non-farm payrolls (NFP), which in turn renewed concerns that the Federal Reserve may remain aggressive in its path of interest rate hikes in an effort to control inflation. This caused a drop in global stocks, as well as a rise in the value of the Dollar. In this article, we will delve into the details of these events, and discuss their impact on various markets, including stocks, currencies, commodities, and cryptocurrencies.
Stock Market
The U.S. stock market experienced a decline on Friday, with the Dow Jones Industrial Average falling by 127.93 points (0.38%), the S&P 500 losing 43.28 points (1.04%), and the Nasdaq Composite dropping 193.86 points (1.59%). Despite these declines, both the S&P 500 and the Nasdaq still managed to secure gains for the week, with the Nasdaq marking its fifth consecutive week of gains, its longest winning streak since October-November 2021.
Currency Market
The release of the U.S. jobs report had a significant impact on the currency market, causing the Dollar Index to strengthen and climb off a nine-month low. The Dollar Index rose 1.149%, and the EUR/USD pair fell 1.02% to 1.0799. The USD/JPY pair rose 1.90% to 131.18, while the GBP/USD pair ended the New York session at 1.2053, down 1.39% on the day.
Commodity Market
Crude oil prices experienced a downturn on Friday, due in part to the strength of the Dollar and concerns about higher interest rates. Both Brent and WTI crude experienced drops of nearly 8% for the week, with WTI settling at $73.39 per barrel (down 3.28%) and Brent settling at $79.94 (down 2.71%).
Gold prices showed extreme volatility last week, as traders struggled to make sense of a barrage of conflicting data and events. Gold prices hit a new cyclical high of $1959 after a seemingly dovish speech by Fed Chairman, but quickly turned south after a surprisingly strong U.S. labor report on Friday. The precious metal finished the week at $1865, with a loss of 3.30%.
Impact on Cryptocurrencies
The NFP report also had an impact on cryptocurrencies as Bitcoin (BTC) fell to $23,379 in the minutes following the news. Bitcoin had been gradually correcting since hitting $24,255 on February 2, indicating profit booking by traders. The current price is near a strong support zone between $22,800 and $22,292, leading experts to believe that buyers will defend this zone. A break below this support zone could trigger several stop losses and potentially start a deeper pullback.
Ether (ETH) has been trading near the $1,680 resistance for several days, leading to a tight consolidation near this overhead resistance. If the bulls assert their dominance, they will have to propel and sustain the price above $1.
