As the year draws to a close, markets slowly quiet down. Last week, we had the BoJ rate decision where there was no change (as expected), and the dovish language was retained. We also got the latest US PCE data, which disappointed slightly, confirming the Fed’s recent dovish shift.

The US Dollar remains under pressure and on a clear downward trend. The DXY index dropped 0.9% to close at 101.709, making new lows and targeting the 100 level.

The Euro finally managed to post a positive week without any surprises in economic data. The EURUSD broke above the 1.10 level, and EURGBP also gained 1% to close at 0.8674.

The Pound had another bad week as UK CPI YoY printed below 4% for the first time since late 2021. UK inflation is rapidly approaching the 2% target, which will be good news for the BoE, which can finally take the foot off the accelerator.

Commodity currencies had a second mega week, taking advantage of the weakening USD and general risk-on environment. The CAD rallied 0.8%, the AUD and NZD gained 1.4%, and the week’s star performer was the NOK with a 2.4% surge higher. Elsewhere in FX, the CHF rallied 1.7%, while the JPY struggled and fell marginally.

Oil reversed some of its recent losses but remains in a range. Last week, the WTI rallied over 2% to close at $73.39.

Precious metals naturally like a weakening Dollar and risk-on, and they duly rallied last week. Gold and Silver gained around 1.5%, closing at $2,053 and $24.19, respectively.

Equities gained some more ground last week, with the pain trade being for higher levels (as mentioned last week). We are heading for the last week of the year, which traditionally is “Santa Claus Rally” territory; we wouldn’t be surprised to see a continued squeeze higher into year-end. Last week, the S&P500 index rallied 0.7% to 4756 points, and the DAX fell marginally to close at 16706 points.

Bonds took a breather last week following a powerful run. The path of least resistance is still for higher levels (and lower yields), so shorts should be extra careful as we trade the final low-liquidity days of the year. Last week, the 10y UST yield fell 2bps to 3.90%, and the 10y Bund rallied 0.4% to close at 137.741.

Finally, crypto-currencies are still exhibiting great volatility. Last week, they rallied strongly and regained all of their previous week’s losses; at the time of writing, Bitcoin and Ethereum are around 4% higher at $43,700 and $2,295, respectively.

The Week Ahead:

The week ahead should be relatively quiet due to the holidays, but it’s most likely that the risk-on trend will continue.

For those who celebrate it, from all of us at Coeus Capital, we wish you a Merry Christmas!

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 or as an official confirmation of any transaction. 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.