Private payrolls and economic growth in focus

The stock market continued to rise on Wednesday as investors await US jobs and economic data amid hopes for a peaceful resolution to the Ukraine conflict. Bond markets caution, however, that aggressive rate hikes could weaken the US economy after 10-year yields dipped below two-year rates overnight. 

Concerns about the economic impact of the war in Ukraine have battered the euro in recent weeks. A rise in risk appetite led to a boost in risk-sensitive currencies, including the Australian and New Zealand dollars. In Asian trading, the Antipodean currencies held their ground just below recent peaks. The South Korean won, hit by the recent surge in oil prices, recorded its best session in two years. In light of Europe's close proximity to the conflict and dependence on Russian energy, the supposedly good news about the war will benefit the euro more than any other currency.

Oil dropped but still holds above $100

Following heavy losses due to an emerging rocky path to the ceasefire, the oil price rebounded on Wednesday as focus turned to tight supply after the American Petroleum Institute industry group reported crude inventories fell by 3 million barrels in the week ended March 25. In New York, oil futures were down 1.6% on Tuesday, rebounding from a brief drop below $100 a barrel earlier in the session. Futures for West Texas Intermediate fell more than 7% after Moscow said it would reduce military operations near Kyiv and that it was interested in meeting with Volodymyr Zelensky for a presidential meeting. Meanwhile, China is currently dealing with its biggest Covid outbreak since the pandemic began. According to Rystad Energy, the latest Shanghai restrictions could lower oil demand by as much as 200,000 barrels a day during the lockdown. The government will release its weekly inventory report on Wednesday.

ADP payrolls

The March's ADP non-farm employment change data - which measures the monthly change in non-farm, private employment - will be released on Wednesday. It is predicted that companies added 450,000 jobs, slightly less than the previously reported 475,000. Yet the data comes to a couple of days before the official employment report and is likely to be a barometer of market sentiment. The data show that the US labour market is in good shape. However, no matter what happens, the Fed will still raise interest rates in March. In early March, ADP revised its January data from a contraction of 301,000 jobs to an increase of 509,000 jobs - a massive shift of 810,000 jobs that dramatically altered analysts' view of the US labour market. 

Economic output

In addition, the fourth-quarter GDP reading is expected to show a 7.1% increase from the previous period, well above the last 2.3% figure. According to data published to date, the economy is doing well and will probably continue to expand in the near future. However, a critical variable that may negatively affect the outlook is the Federal Reserve's tightening policy as it attempts to tame inflation risks. Because of the alerting condition of the yield curve, the economy is likely at a low-recession risk at the moment.

Crude inventories

Crude oil inventory data will be released later in the session, with analysts forecasting a drop of 1.022 million barrels. Distillate stocks are expected to decline by 1.550 million this week. Likewise, gasoline inventories are expected to drop by 1.744 million, increasing concerns about supply shortages and cutting further losses in the short term.