Last week witnessed significant market shifts, largely steered by central bank actions. Among the surprises was the Norges Bank rate hike, but it was the Federal Reserve’s dovish stance that notably impacted market sentiments.
USD Takes a Dive:
The US Dollar retraced all gains from the prior week, driven by a dovish Fed. The DXY index plummeted 1.3%, breaching new lows and eyeing the July levels around 100.
Euro and Pound Under Pressure:
Continued weak economic indicators in the Eurozone weighed on the Euro’s performance despite a moderately hawkish ECB. The Pound faced challenges as well, impacted by lackluster UK data on average hourly earnings and GDP.
Commodity Currencies Shine:
Volatility in USD and yields saw a rollercoaster ride for commodity currencies. AUD, NZD, CAD, and particularly NOK (bolstered by the surprise Norges Bank hike) showcased strong performances, gaining between 1.5% and 4% against the USD.
Oil Consolidation Amid Downward Trend:
Oil witnessed a week of consolidation amidst a prevailing downtrend, with WTI gaining 0.7% to close at $71.74.
Precious Metals Remain in Focus:
With falling yields and a weakening Dollar, precious metals continued their volatile journey. Gold climbed 0.7% to $2,019 while Silver surged 3.7% to $23.84, aiming for Gold’s ATHs at around $2,150.
Market Indices and Bonds:
Equities sustained their upward trajectory, led by the S&P500 with a 2.6% surge, while the DAX remained close to its all-time highs. Bonds experienced bullish momentum, with the 10y UST yield dropping 31bps to 3.92% and the 10y Bund rallying to 137.188 points.
Crypto-Currencies Witness Volatility:
Cryptos showcased high volatility despite the overall risk-on sentiment in markets. Bitcoin and Ethereum faced a 5% decline, trading around $41,800 and $2,215 respectively.
Looking Ahead:
The upcoming week brings the BoJ meeting, a potential market-moving event. Additionally, markets anticipate inflation data from several major economies, including Eurozone, Canada, the UK, Japan, and Mexico, alongside the Fed’s Core PCE measure.
Stay tuned for another eventful week in the financial markets!
