Markets cheerful, dollar pressured Nonfarm Payrolls, Good Friday edition

Markets have kicked off Q2 with an upswing after President Biden’s infrastructure plan, hopes for a vaccine-led recovery, and upbeat US data. While many parts of the world are off, US Nonfarm Payrolls stand out on Good Friday, with elevated expectations.

The S&P 500 Index closed the first day of the second quarter above 4,000, raising the profile of stocks worldwide. The upbeat mood weighed on the safe-haven dollar. Investors are still digesting President Joe Biden’s proposed $2.25 infrastructure scheme, which will be funded by tax hikes.

Republicans have already expressed their opposition to higher rates on corporates and Congress will likely modify the program. Ten-year Treasury yields have dropped below 1.70% as prospects of massive debt issuance subside. Gold has been able to take advantage of this and recover.

Around 30% of Americans have received at least one vaccine shot, and the world’s largest economy is on course to immunizing all adults early in the summer. The pace of jabbing has also picked up in Europe, but COVID-19 infections are on the rise. France, Italy and Germany are under severe restrictions around Easter.

The US ISM Manufacturing Purchasing Managers’ Index smashed estimates with 64.7 points in March, the highest since 1983. This forward-looking gauge has raised expectations for Friday’s Nonfarm Payrolls report, which is set to be the first of many upbeat publications.

The economic calendar is pointing to an increase of over 600,000 positions, but some analysts have also touted one million jobs gained. On the other hand, Thursday’s jobless claims statistics disappointed by jumping back above 700,000.

The mix of low liquidity and high expectations could prove explosive for currencies, where trading remains active despite the holiday.

WTI Crude Oil is trading above $61 after OPEC+ countries decided to extend production cuts for another month and despite Saudi Arabia’s announcement that it would taper down its voluntary output curbs in the next few months. Hopes for a strong global recovery have outweighed concerns about oversupply.

Bitcoin has stabilized below $60,000 as more institutional interest pours into the granddaddy of cryptocurrencies. Ethereum is flirting with the round 2,000 level.

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