In the world of forex trading, every week brings new developments and market dynamics. The past week saw significant shifts in the forex landscape, from the end of the US Dollar’s winning streak to fluctuations in commodity currencies and the ongoing debate surrounding precious metals. In this weekly recap, we’ll dissect the key events and market movements that shaped the forex landscape.
US Dollar’s Remarkable Streak Comes to an End
The US Dollar had been on an impressive winning streak, with weeks of consecutive gains. However, the past week marked a slight reversal in its fortune as the greenback posted a marginally negative performance. This pullback was expected after such an extraordinary run, and it raised questions about the Dollar’s sustainability at its peak.
Euro and Pound Remain Steady
In contrast to the US Dollar’s modest decline, the Euro and the Pound had relatively quiet weeks. There were no major data releases or events to significantly influence their performance. Both currencies maintained their stability amid the ongoing forex landscape.
Commodity Currencies Feel the Pressure
Commodity currencies faced considerable pressure as rising yields added downward force. The New Zealand Dollar (NZD) experienced minimal movement, while the Australian Dollar (AUD) and Canadian Dollar (CAD) both saw a 0.6% decrease. The Norwegian Krone (NOK) was hit harder, suffering a 2% depreciation against the US Dollar. These shifts were driven by the influence of rising yields, which created challenges for commodity currencies.
Oil’s Remarkable Rally Takes a Pause
After months of impressive gains, the oil market finally showed signs of weakness. The West Texas Intermediate (WTI) crude oil fell by 8.8% during the week, closing at $8.8%. This pullback raises questions about the sustainability of oil’s remarkable rally.
Precious Metals Face Headwinds
Despite inflation driving the prices of most assets higher, precious metals faced headwinds that pushed them lower. Gold, typically considered a hedge against inflation, fell by 0.9% to $1,832, while Silver dropped by 2.7% to close at $21.59. The apparent disconnect between precious metals and inflation left investors wondering about the factors influencing these assets.
Equities Display Resilience Amid Global Challenges
Global equities demonstrated resilience in the face of rising yields and deteriorating global economic data. The S&P500 index rose by 0.4% to reach 4,307 points, defying expectations of a decline. Similarly, the DAX index fell by 0.5% to close at 15,271 points, showing that equities were relatively unaffected by the prevailing challenges.
Bonds Continue Downward Trend
Bonds have been on a one-way trajectory in recent weeks, showing a lack of buying interest. Central bankers’ warnings about the global economy’s condition have done little to reverse this trend. The “higher for longer” narrative remains dominant, with momentum clearly favoring the downside for bonds. The 10-year US Treasury yield rose by an additional 21 basis points to close at 4.78%, while the 10-year Bund yield fell by 0.4% to close at 127.817.
Cryptocurrencies Maintain Support Base
Cryptocurrencies continued to maintain a solid support base, trading relatively well. However, their performance remains correlated with risk, which means an equity sell-off could impact them. Bitcoin experienced a nearly 4% increase, reaching $27,900, while Ethereum saw a 1.8% decrease, closing at $1,640.
The Week Ahead: Focus on Yields and Inflation
In the upcoming week, the focus will once again be on yields, which have a significant impact on the Dollar and equities. The correlation between yields and these assets has been weak recently. Data-wise, the spotlight will be on inflation, with readings from Mexico, Norway, Germany, and the US. As always, traders are encouraged to exercise caution and trade wisely in these dynamic and ever-changing market conditions.
Below, you will find a compilation of the most anticipated economic events scheduled for the upcoming week, presented in GMT Time.
MONDAY, OCTOBER 9
00:00 USD IMF Meeting
06:00 GER Industrial Production n.s.a. w.d.a. (YoY)(Aug)
06:00 GER Industrial Production s.a. (MoM)(Aug)
08:30 EUR Sentix Investor Confidence(Oct)
11:00 MXN Headline Inflation(Sep)
23:01 GBP BRC Like-For-Like Retail Sales (YoY)(Sep)
23:30 AUD Westpac Consumer Confidence(Oct)
23:50 JPY Current Account n.s.a.(Aug)
TUESDAY, OCTOBER 10
00:00 USD IMF Meeting
WEDNESDAY, OCTOBER 11
00:00 USD IMF Meeting
00:30 AUD RBA’s Kent speech
06:00 GER Harmonized Index of Consumer Prices (MoM)(Sep)
06:00 GER Harmonized Index of Consumer Prices (YoY)(Sep)
12:30 USD Producer Price Index (MoM)(Sep)
12:30 USD Producer Price Index (YoY)(Sep)
12:30 USD Producer Price Index ex Food & Energy (MoM)(Sep)
12:30 USD Producer Price Index ex Food & Energy (YoY)(Sep)
18:00 USD FOMC Minutes
THURSDAY, OCTOBER 12
00:00 USD IMF Meeting
00:00 AUD Consumer Inflation Expectations(Oct)
06:00 GBP Gross Domestic Product (MoM)(Aug)
06:00 GBP Industrial Production (MoM)(Aug)
06:00 GBP Manufacturing Production (MoM)(Aug)
06:00 GBP Manufacturing Production (YoY)(Aug)
11:30 EUR ECB Monetary Policy Meeting Accounts
12:30 USD Consumer Price Index (MoM)(Sep)
12:30 USD Consumer Price Index (YoY)(Sep)
12:30 USD Consumer Price Index ex Food & Energy (MoM)(Sep)
12:30 USD Consumer Price Index ex Food & Energy (YoY)(Sep)
12:30 USD Initial Jobless Claims(Oct 6)
21:30 NZD Business NZ PMI(Sep)
FRIDAY, OCTOBER 13
00:00 USD IMF Meeting
01:30 CNY Consumer Price Index (MoM)(Sep)
01:30 CNY Consumer Price Index (YoY)(Sep)
01:30 CNY Producer Price Index (YoY)(Sep)
03:00 CNY Exports (YoY)(Sep)
03:00 CNY Exports (YoY) CNY(Sep)
03:00 CNY Imports (YoY)(Sep)
03:00 CNY Imports (YoY) CNY(Sep)
03:00 CNY Trade Balance CNY(Sep)
03:00 CNY Trade Balance USD(Sep)
06:45 FRA Consumer Price Index (EU norm) (YoY)(Sep)
07:00 SPA Harmonized Index of Consumer Prices (YoY)(Sep)
09:00 EUR Industrial Production s.a. (MoM)(Aug)
14:00 USD Michigan Consumer Sentiment Index(Oct) PREL
14:00 USD UoM 5-year Consumer Inflation Expectation(Oct) PREL
SATURDAY, OCTOBER 14
00:00 USD IMF Meeting
