In the past week, existing trends persisted, marked chiefly by declining oil and precious metal prices, alongside a strengthening US Dollar. The US Dollar experienced increased buying pressure due to persistent US inflation and expectations of Federal Reserve policy tightening to combat it. Consequently, the DXY index concluded the week 0.6% higher at 101.366.
The Euro weakened against several major currencies as Eurozone data remained unstable. Notably, the EURUSD dropped below 1.14 for the first time in nearly a year.
The British Pound encountered a mixed week, with no significant UK economic data releases.
Commodity currencies suffered a sharp decline for a second consecutive week, driven by falling oil prices and a stronger Dollar. The Canadian Dollar decreased by 0.3%, while the Australian and New Zealand Dollars fell nearly 2%. In other forex markets, the Japanese Yen and Swiss Franc fell 0.3%.
Oil continued its downward trend, posting another substantial weekly loss. The market is now pricing in a full de-escalation in Iran, which carries significant risks. The WTI crude oil price fell by over 8% to close at $70.25.
Precious metals continued to face intense pressure due to the prospect of higher yields and a hawkish Federal Reserve, deterring investors. Gold dropped 1.6% to $4,088, and Silver tumbled nearly 9% to $59.19.
Bonds maintained strong performance, buoyed mainly by the decline in oil prices. The 10-year US Treasury yield fell 8 basis points to 4.38%, and the 10-year German Bund rallied over 1%, closing at 127.387.
Equities experienced a negative week, though there is no technical indication of a peak yet. Tech and AI stocks showed some weakness, raising the question of potential follow-through. The S&P500 index declined 2% to 7336, and the DAX fell 1.3% to 24671 points.
Cryptocurrencies continue to underperform equities, showing prolonged weakness. Currently, Bitcoin is down nearly 5% at $60,700, and Ethereum is down 7% at $1,600.
Looking ahead, the upcoming week is packed with data releases, including PMIs, UK and Canadian GDP, Swiss and Eurozone CPI, and the crucial US NFP.
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.
