Following solid gains on Wall Street overnight, Asian stock markets traded higher on Friday in a holiday-lightened trading session. The S&P 500 index topped 4000 for the first time on Thursday, as global investors continue to cheer strong economic data out of Europe and the US, Biden’s infrastructure plan, and the retreating US Treasury yields.
As 10-year yields fell back below 1.7%, adding to investor optimism, Japan’s Nikkei 225 rose 1.58%, the Shanghai Composite edged 0.52% higher, while South Korea’s Kospi gained 0.82% today. Markets in Hong Kong and Australia were closed for the holiday. Most European stocks and US markets will be closed on Good Friday as well, suggesting trading volumes will be low ahead of the weekend.
In currencies, after a pullback yesterday, the dollar is steady ahead of US jobs data due later today. As such, USD/JPY continues to hover below 111.00, clinging to local lows around 110.35. So far, downside risks are looking limited despite the daily RSI is pointing south in the overbought territory. Furthermore, the pair could regain upside momentum following the current correction due to a combination of outperformance of the US economy and the mega-loose stance from the Bank of Japan. In the short term, the key immediate support arrives at 110.00.
Meanwhile, EURUSD struggles below the 1.1800 figure following a bounce from four-month lows seen around 1.1700 earlier in the week. the euro lacks directional bias as most European markets are closed on the Easter weekend. Still, traders await the US NFP data release for fresh cues. Despite the risk-on market mood weighed heavily on the safe-haven dollar, the pair’s recovery potential remains limited in the short term. The common currency may need an extra catalyst to challenge the 1.1800 level and retarget the descending 20-DMA that arrives at 1.1855 today.
Elsewhere, oil prices are steady at $64.60 in thin trading on Friday following a short-lived spike above the $65 figure seen on Thursday when the OPEC+ countries announced the decision to gradually increase their output over the next three months. The group will increase its output by 350,000 barrels per day next month, another 350,000 barrels per day in June, and roughly 440,000 barrels per day in July.
Nathan Lambert, Head of Global FX Analytical Department