It was another data-heavy week dominated by central bank rate decisions. The Bank of Japan finally exited negative rates territory that had been in use for a number of years. The Federal Reserve kept rates unchanged, but Powell was dovish, while the SNB and Banxico cut rates by 25bps.

The US Dollar had a second strong week in a row despite the dovish Fed. However, dollar bulls should be cautious. Last week, the DXY index rallied 1% to close at 104.431 and looked for the critical 105 resistance level.

The Euro and the Pound had another forgettable week without any significant developments. The two remaining BoE hawks voted for no change (as expected), and UK CPI came in 0.1% lower than expected.

For the second week, commodity currencies were hit by a rising dollar. The AUD and CAD fell by around 0.5%, while the NZD fared worse with a 1.5% drop. Elsewhere in FX, the JPY fell 1.6% as the BoJ rate hike was not enough to support the currency, the CHF also fell 1.5% following the SNB’s surprise rate cut, and the MXN fared best with only a marginal drop.

Oil finally had a relatively quiet week; WTI closed the week 0.3% lower at $80.74.

Precious metals had a great start to the week but were again met with vicious technical selling. Silver broke out of a 4-year channel, but shorts came out in force and slammed it back down. Ultimately, Gold registered a 0.4% gain at $2,165, and Silver fell 2% to close at $24.67.

Equities remain bullish technically, and – we’ve been saying this for months – the path of least resistance still seems to be higher. Dips are quickly bought, and bears are constantly frustrated. Last week, the S&P500 index rallied 2.1% to close at 5236, and the DAX gained 1.5% to close at 18205.

Bonds failed to take out important support once again, and this support seems to be very robust indeed. Last week, the 10y UST yield found resistance at around 4.35%, yet again, it closed the week 10bps lower at 4.21%. The 10y Bund rallied 0.9% to close at 133.093.

Finally, crypto-currencies are trying to find support following their retreat from last week’s highs. At the time of writing, Bitcoin was down around 1% at $65,500, and Ethereum was 3% lower at $3,400.

The Week Ahead:

We are done with central bank rate decisions for now, but that doesn’t mean the week ahead will be quiet. We have major data releases, including US GDP and PCE, which are always market movers.

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