Last week’s focus was on equity indices, looking for signs of stabilization following the previous week’s strong sell-off. Global economic data remains mixed, and the US PCE inflation reading came in flat as expected.
Currency Markets
US Dollar (USD)
The US Dollar continued to underperform, closing the week flat even as US equities retreated, and GDP came in stronger than expected. Last week the DXY was flat at 104.327. All eyes are now on next week’s Nonfarm Payrolls number.
British Pound (GBP) and Euro (EUR)
The Pound and the Euro moved in tandem again, remaining well correlated in the past weeks. Eurozone PMIs came in weaker than expected again, and the market looks to the Bank of England’s interest rate decision next week for direction.
Commodity Currencies
Commodity currencies had a third very poor week in a row, as commodities suffered across the board:
- CAD and NOK fell just under 1% against the Dollar
- AUD and NZD crashed 2% lower
Other Currencies
- MXN fell another 2.3%, with USDMXN now reaching the important 18.50-19 resistance zone
- CHF rallied 0.6% as flight-to-safety helped the Franc
- JPY continued its recent short squeeze rally with a 2.3% gain
Commodities
Oil
Oil had another negative week in the general risk-off sentiment. Last week WTI fell nearly 3% to close at $76.41.
Precious Metals
It was a tale of two halves for precious metals once again:
- Gold showed another composed performance, falling 0.6% to close at $2,387
- Silver experienced severe weakness, crashing 4.4% lower to $27.93. It has now dropped 10% in two weeks, heading towards the original $26-$26.20 breakout level which should offer strong support.
Bonds
Bonds rallied further last week:
- 10y UST yield fell 5bps to close at 4.19%
- 10y Bund rallied 0.5% to close at 132.668
Equities
Equities tried to find some support following the previous week’s sell-off, resulting in a mixed performance overall:
- S&P500 index fell 0.8% to 5467 points
- DAX rallied 1.3% to close at 18417 points
Cryptocurrencies
Cryptocurrencies participated in the general market volatility last week. Just like precious metals and Gold, Bitcoin proved to be very resilient while the other coins suffered:
- Bitcoin is up 1% at $67,500
- Ethereum is nearly 8% lower at $3,230
The Week Ahead
Equities will attract all the attention next week, as bulls need to find some support at around these levels to avoid visiting much lower levels. Yields remain subdued, which should help risk assets, but there are many economic data releases next week which could wreak havoc. We have GDP data from the Eurozone, Canada, and Mexico, as well as US ADP and NFP, and interest rate decisions from the BoJ, BoE, and the Fed. Good luck!
