Throughout the week, markets showed caution as the conflict in Iran remained unresolved. On Friday, US Nonfarm Payrolls surpassed expectations, triggering widespread selling across most markets.
The US Dollar strengthened significantly as risk assets declined and US data exceeded forecasts, with the DXY index rising over 1% to close at 100.071.
The Euro experienced a mixed week, declining against major currencies such as the USD, GBP, and JPY, but gaining against commodity currencies. Similarly, the Pound showed mixed performance, dropping against the Dollar but remaining relatively stable against other currencies due to a lack of significant UK economic data.
Commodity currencies suffered as risk assets were broadly sold off, with the CAD falling by 1%, the AUD by around 2%, and the NZD plummeting over 3% against the Dollar. In other forex movements, the JPY decreased by 0.7%, and the CHF fell by 2%.
Oil prices partially recovered from previous losses amid the ongoing uncertainty in Iran, with WTI gaining 2.8% to finish at $90.24.
Precious metals experienced a sharp decline, likely halting many leveraged long positions, with Gold falling 4.7% to $4,328 and Silver dropping 10% to $67.75. Gold is now positioned within the critical $4,300-$4,350 support range, and Silver appears to be approaching the $64 spike lows.
Bonds declined as oil prices rose and uncertainty persisted, but they fared better than anticipated under the circumstances, with the 10-year UST yield rising 9bps to 4.53% and the 10-year Bund rising 0.6% to close at 125.538.
Equities displayed weakness following the robust NFP report, with widespread selling on Friday, resulting in the S&P 500 index closing the week 3% lower at 7357 and the DAX down 1.4% at 24757.
Finally, cryptocurrencies, which had underperformed risk assets for months, fell again amid the equity sell-off. At the time of writing, Bitcoin is 15% lower at $62,000, hovering just above the crucial $60,000 support level, and Ethereum is 20% lower at $1,600.
The upcoming week will be crucial for risk assets, as whether current trends will continue or a rebound will materialise remains uncertain. The ongoing conflict in Iran, with no apparent resolution, will heavily influence asset prices.
Upcoming data includes interest rate decisions from the BoC (no change anticipated) and the ECB (a 25 bp hike expected), as well as US CPI data.
Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this newsletter or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.
