Last week saw reported progress in the Iran-US negotiations, which contributed to an optimistic market sentiment. This optimism was evidenced by a significant decline in oil prices over the week. Equities and precious metals both rose, the latter posting an impressive weekly gain. The US Dollar remained relatively flat during the week, but a negative Nonfarm Payrolls number on Friday led to a slight drop, with the DXY index ending 0.2% lower at 99.604. Caution is advised for bulls, as the FOMC’s stance and deteriorating US data suggest potential lower Dollar prices.
The Euro and the Pound experienced a flat week due to mixed PMI data.
Commodity currencies outperformed expectations despite the drop in oil prices; the NZD was flat, AUD and CAD gained 0.5%, while NOK fell by 0.6%. The CHF and JPY were broadly flat.
Oil prices rallied on news of Iran-US negotiation progress, despite a recent rollercoaster of movements. The WTI fell over 11% to close at $77.07.
Precious metals had a strong week, potentially marking a medium-term bottom. Central banks and governments may be aiming for lower yields, indicating more QE in the future, possibly influencing metals. Gold rallied 7% to $4,342, and Silver rose over 11% to $63.55.
Bonds reacted positively to the potential Iran deal and falling oil prices. The 10-year UST yield fell 7bps to 4.65%, and the 10-year Bund rose 0.7% to 125.056 points. Equities continued to rise, hitting new all-time highs, possibly anticipating currency debasement. The S&P500 index rose 3.5% to 7746, and the DAX increased 2.7% to 26319.
Cryptocurrencies rallied but underperformed compared to equities. Bitcoin and Ethereum saw around 2% increases, priced at $64,900 and $1,910, respectively. The market is watching to see if this is a consolidation phase before another surge.
Looking ahead, the approach of the US midterms pressures Trump for an official end to the Iran conflict. Markets focus on economic data and anticipate actions from Warsh’s Fed. Key data includes the RBA interest rate decision (no change expected) and significant US CPI & PPI releases. Summer markets often have high volatility on low volume, so traders should adjust their strategies accordingly.
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.
