Markets Surge on Weak US CPI Data
The past week saw a robust rally across various markets, spurred by marginally weak US CPI data reported on Wednesday. Equities and cryptocurrencies performed well, with a significant spotlight on precious metals and copper, which saw explosive growth.
Key Highlights:
US Dollar Decline:
- The US Dollar continued its downward trend amid disappointing economic data and ongoing concerns about the US debt situation. The DXY index dropped 0.8%, closing at 104.497.
Euro Strength:
- Despite ECB members confirming a likely rate cut in June, the Euro performed well. The EURUSD pair rose nearly 1%, closing at 1.0867, approaching the 1.10 resistance level.
Pound Rally:
- The Pound gained strength from better-than-expected earnings data, rising 0.5% against the EUR and 1.4% against the USD.
Commodity Currencies and Market Dynamics:
- Commodity currencies thrived amid the risk-on sentiment and Dollar weakness. The CAD gained 0.4%, while the AUD and NOK rallied 1.5%. The NZD surged nearly 2% against the Dollar. In other FX movements, the JPY and CHF remained stable, and the MXN rallied 1%.
Oil Prices Rise:
- Oil prices mirrored the broader commodity rally, with WTI gaining 1.7% to close the week at $79.46.
Precious Metals Surge:
- Precious metals experienced significant gains. Gold rose 2.3%, closing at $2,414, nearing new all-time highs. Silver broke through the critical $30 resistance level, ending the week almost 12% higher at $31.50.
Equities Remain Strong:
- Equities maintained their upward trajectory, with the S&P 500 index rising 1.7% to new all-time highs of 5306. The DAX saw a marginal decline, closing at 18704 points.
Bond Market Activity:
- Bonds rallied as markets priced in more US rate cuts for 2024. The 10y UST yield fell 8bps to 4.42%, while the 10y Bund remained broadly flat at 130.668.
Cryptocurrencies Rally:
- Cryptocurrencies surged with the risk-on sentiment. Bitcoin rose nearly 10% to $67,000, and Ethereum increased by 7.7% to $3,135.
The Week Ahead:
Looking forward, the risk-on sentiment may persist, with bond strength and US Dollar weakness likely continuing to support equities, commodities, and cryptocurrencies. Key data releases include CPI readings from Canada and the UK, additional PMIs, and the RBNZ interest rate decision.
Trade safe and good luck!
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