Category: Weekly Market Recap

US Dollar finally rebounds amid mixed data as equities and commodities diverge

The US economy remained the main focus last week, with markets closely watching developments and trying to second-guess the Fed’s future rate path. Equities remained strong, and the Dollar finally bounced after several weeks of pain.

The US Dollar had a good week among mixed US economic data. GDP beat expectations at 3% QoQ, but Core CPI and Headline CPI were 0.1% lower than expected. The DXY index didn’t reach the 99.60 support area and closed the week 1% higher at 101.732.

The Poundconsolidated its recent gains, showing more conviction in the past weeks. Last week, the Sterling gained 0.6% against the Euro, falling by the same amount against the Dollar.

The Euro remains vulnerable, with another poor weekly performance. More ECB doves are emerging, and rates look like they will be cut further – bringing weakness to the single currency in the short term.

Commodity currencies didn’t make it to the fifth weekly rally and showed mixed performance. Last week, the CAD, AUD and NZD were all broadly flat, while the NOK fell 1.5% against the greenback. Elsewhere in FX, the CHF fell 0.3%, and the JPY lost 1.2%.

Oilsaw weakness following talk of a gradual supply increase by OPEC. Last week, the WTI fell 1.8%, closing at $73.59.

Precious metals usually underperform when the Dollar rallies; last week was no exception. Gold still reigns supreme and shows tremendous resilience, closing the week only marginally lower at $2,503. Conversely, Silver traded poorly and closed the week 3.2% lower at $28.86.

Bondsreversed last week’s losses and remain in a short-term sideways consolidation pattern. Last week, the 10-year UST yield rose 10bps to close at 3.91%, and the 10-yearBund fell 0.7% to 133.546 points.

Equitiesshowed more resilience and strength, with some major indices hitting new all-time highs. Last week, the S&P500 index rallied marginally to close at 5644 points, and the DAX hit new all-time highs at 18906.

Finally, crypto-currencies couldn’t hold onto the previous week’s gains for long. It’s worth noting that cryptos seem to have lost their short-term correlation with equities; they are underperforming while equities are surging higher. At the time of writing, Bitcoin and Ethereum are roughly 10% lower at $58,200 and $2,475 respectively.

The Week Ahead:

We are getting closer and closer to the upcoming US elections, and the result is very difficult to call. No matter which candidate wins, the main problem—surging deficits—will likely remain unresolved. We have a very busy week coming up in terms of economic data, with Services & Manufacturing PMIs and the all-important US Nonfarm Payrolls.

Market Commentary:This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell 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.

Powells’ speech confirms rate cuts in September: USD decreases further

All eyes were on Jackson Hole and Jay Powell last week, and he didn’t disappoint! In an admittedly dovish speech, he essentially confirmed the September rate cut and left the door open for considerable easing if the US economic data disappoints. Risk assets rallied in response; overall, markets traded well last week.

The US Dollarfell further following Powell’s speech, breaking important support. Last week, the DXY index fell 1.7% to close at 100.677 and is now eyeing critical support at around 99.60.

The Pound had another excellent week, continuing its recent strong run, helped by some stronger-than-expected PMIs. The GBPUSD rallied over 2% to close above 1.32, and the EURGBP fell 0.6% to close well below the 0.85 level again.

The Euro didn’t find any strength last week, as Eurozone CPI came in at 2.6% as expected, and economic data was mixed. The single currency rallied against the USD last week but was frail against the other majors.

Commodity currencies had a fourth strong week in a row, making it a month of gains; the weakening Dollar and risk rally helped. Last week, the CAD rallied around 1%, the AUD and NOK gained 2%, and the NZD outperformed with a stellar 3% gain. Elsewhere in FX, the JPY and CHF rallied over 2% against the greenback.

Oil remains mixed and lacks direction. It exhibits high weekly volatility but no real course. Last week, the WTI fell 0.7% to close at $74.91.

Precious metals had another good week, with Gold hitting new intra-week ATHs and Silver outperforming for the second week. Technically, precious metals still look strong, and a buy-the-dip strategy will likely be the right one. Last week, Gold gained 0.2% to close at $2,512, and Silver rallied 2.7% to close at $29.83. It’s worth noting that Platinum underperformed once again, and it looks like it might be very close to a bottom on a ratio of gold and silver.

Bonds gained more ground as yet more rate cuts were priced into the yield curve. Last week, the 10-year UST yield fell 8bps to 3.81%, and the 10-yearBund rallied marginally to close at 134.453 points.

Equities naturally liked Powell’s dovish speech and posted another positive week. The path of least resistance remains to the upside, especially since many of these rallies are continuously met with short-sellers. Last week, the S&P500 index gained 1.4% to close at 5635 points, and the DAX rallied 1.7% to close at 18633. Both indices are within striking distance of their respective ATHs.

Finally, crypto-currencies managed to outperform for the first time in many weeks. The risk-on rally comprehensively lifted cryptos; Bitcoin was up over 7% at $64,000, and Ethereum was 5% higher at $2,750.

The Week Ahead: “Don’t Fight the Fed!” – Last week’s risk rally will likely continue for the following weeks, and shorts should be very careful. We have US CPI and GDP next week, and strong prints could temporarily put the brakes on the rally, but the big picture is still bullish for now.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell 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.

US Dollar slided further despite strong Consumer Confidence

We said last week that “…all eyes will also be on yields and the Dollar, which will likely resume their move lower” – and this is exactly what transpired. The general trend continued, with equities finding strength as volatility subsided and the greenback lost ground.

The US dollar had one sideways and couldn’t bounce at all. Last week, the DXY index fell 0.7%, closingat 102.402 points. US economic data remains mixed, and headline CPI fell to 2.9% YoY; this makes the Fed’s job easier to start the cutting cycle in September.

Sterling had a good week as UK economic data remains decent, even if CPI fell to 2.2%. Last week, the GBPUSD rallied 1.4% to close well above 1.29. The Euro had another quiet week, as Eurozone GDP aligned with expectations at 0.3% QoQ.

Commodity currencies had a third intense week in a row, helped by the Dollar dip and risk rally. Last week, the CAD gained 0.4%, the NZD rallied 0.9 (even as the BRNZ cut rates), the NOK gained 1.2% as Norges Bank held steady, and the AUD outperformed with a 1.5% rise. Elsewhere in FX, the CHF was broadly flat, and the JPY fell 0.6%.

Oil is still in a constant state of see-saw action, with elevated volatility but no clear direction. Last week, the WTI fell over 2% to close at $75.41. Precious metals had a very good week, and for once, Silver outperformed.

Gold hit new all-time highs, closing the week 3.2% higher at $2,508. Silver registered a 5.8% rally, closing above $29. Technically Gold looks better than silver and platinum, and shorts should tread very carefully.

Bonds rallied modestly last week as more rate cuts were priced into the curve for the Federal Reserve and other central banks. The 10-year UST yield fell 5bps to close at 3.89%, and the 10-year Bund was broadly flat at 134.347.

Equities had a solid week, resuming their upward move and still showing no technical evidence of a significant correction lower. Last week, the S&P500 index rallied over 4% to close at 5558 points, and the DAX gained 3.4% to close at 18322.

Finally, crypto-currencies traded poorly, given the Dollar’s weakness and risk-on sentiment last week. At the time of writing, Bitcoin is 1.5% lower at $59,500, and Ethereum is flat at $2,615.

The Week Ahead:

The drop in yields and the Dollar will likely continue in the weeks ahead, bringing more strength to equities (barring any major geopolitical developments). Data-wise, we have inflation readings from the Eurozone, Canada, and Japan, and we also get a wide range of PMIs from across the globe. However, all eyes will be on the Jackson Hole Symposium and Jay Powell.

Mixed US data halt further weakening US Dollar

The markets slowed down last week, stopping the recent risk-off action and general market selling. Equity indices closed the week broadly flat, which was a relief for investors, but this move might not be over just yet.

The US Dollarfinally found its footing and stopped its recent downtrend. US economic data came in mixed last week, and the DXY index closed roughly flat at 103.154.

The Pound saw some weakness early on in the week but rallied back to close roughly unchanged. EURGBP remains in the mid-85s, and GBPUSD is in the mid-1.27s.

The Euro had a quiet week, even as Eurozone economic data surprised to the upside. The issue is still the magnitude and timing of ECB rate cuts, and we need more evidence to have a firm view of the single currency.

Commodity currencies had a second good week in a row, helped by the rallying oil price. The NZD rallied 0.7% against the Dollar, the AUD and CAD gained around 1%, and the NOK rallied 1.2%. Elsewhere in FX, the JPY was flat, and the CHF fell 0.9%.

Oil reversed the previous week’s losses and trades well within the broad 1-year range. Last week, WTI rose nearly 4% to close at $77.

Precious metals once again showed two very distinct sides. Gold reigned supreme again, showing great strength and potential, but Silver retreated further. Last week, Gold was marginally lower at $2,431, and Silver fell nearly 4% to $27.45.

Bonds sold off after the previous week’s monster rally as resistance was reached. Last week, the 10y UST yield rose 15bps to 3.94%, and the 10y Bund fell 0.5% to close at 134.517 points.

Equities finally stopped falling but didn’t manage to bounce at all. Last week, the S&P500 index was flat at 5341 points, and the DAX closed marginally higher at 17722 points.

Finally, crypto-currencies remain under pressure –alt-coins, particularly, are suffering. At the time of writing, Bitcoin was down 2.5% at $60,400, and Ethereum crashed 13% lower at $2,610.

The Week Ahead:

Will equities manage to bounce next week, or was last week’s consolidation just a short-term thing? All eyes will also be on yields and the Dollar, which will likely resume their move lower. We have interest rate decisions from the RBNZ and Norges Bank, as well as CPI data from the US.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell 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.

Bank of Japan increases interest rates, leading to an unwind of the carry trade

Risk off continued last week, mainly fuelled by deteriorating US economic data—with employment in particular showing weakness. The Yen carry trade is being unwound (with the BoJ hiking rates again), putting further pressure on equities and other risk assets.

The US Dollar had yet another negative week, as markets now price a good chance of a Federal Reserve 50bp rate cut in September. The DXY index fell 1.1% to close at 103.221 last week as it moved swiftly towards the 101-101.50 support area.

The Pound had a negative week as the Bank of England followed the ECB in cutting rates. The BoE’s dovishness puts a lid on any Pound strength, with GBPUSD closing at the 1.28 level and EURGBP moving back up to resistance in the low 0.85s.

The Euro performed well last week, as the Eurozone GDP and CPI were surprised by the upside. The EURUSD rallied 0.5% to close above 1.09 again, and the single currency rallied against many other majors.

Commodity currencies had an encouraging week despite the general risk sell-off. The AUD and CAD fell around 0.5%, while the NZD and NOK rallied 1.2% and 0.7% respectively. Elsewhere in FX, the CHF rallied nearly 3%, and the JPY was the week’s superstar currency with a 4.7% gain against the greenback.

Oil and risk assets were under pressure all week, registering a fourth negative week. The WTI fell 3%, closing at $74.11, and is now heading towards massive support at the $62-$66 zone.

Precious metals usually perform poorly during risk-off periods and general panic, but they showed great resilience last week. Gold and Silver rallied over 2% to close at $2,442 and $28.56, respectively.

Bonds had a monster week, driven by increased rate cut expectations worldwide. The US treasury market led the way higher, with yields collapsing across the curve in a bull flattener. Last week, the 10-year UST yield fell 40bps to close right on major support at 3.79%, while the 10-year Bund rallied 1.9% to close at 135.198 points.

Equities continued their collapse lower and are now near technical support. A bounce from here is probable, and we must remember that monetary easing usually supports stocks. Last week, the S&P500 index fell 2.4% to close at 5335 points, and the DAX crashed 4.1% lower at 17661 points.

Finally, crypto-currencies sold off hard in line with equities, despite Donald Trump’s vocal support for cryptos should he become president again. At the time of writing, Bitcoin was down 8% at $62,000, and Ethereum was down 7% at $3,000.

The Week Ahead:

Next week, equities and risk assets will dominate as the market struggles to find support. Can we see a bounce from here following three negative weeks in a row? Data-wise, we have interest rate decisions from the RBA and Banxico, and we also have Services PMIs from across the globe.

Commodity currencies continue a weak performance as China’s demand disappoints

Last week’s focus was on equity indices, looking for signs of stabilisation following the previous week’s strong sell-off. Global economic data remains mixed, and the US PCE inflation reading was flat, as expected.

The US Dollar continued to underperform, closing the week flat even as US equities retreated, and GDP came in stronger than expected. Last week, the DXY was flat at 104.327. All eyes are now on next week’s Nonfarm Payrolls number.

The Pound and the Euro moved in tandem again, remaining well-correlated in the past weeks. Eurozone PMIs came in weaker than expected again, and the market looks to the Bank of England’s interest rate decision next week for direction.

Commodity currencies had a third abysmal week in a row, as commodities suffered across the board. Last week, the CAD and NOK fell just under 1% against the dollar, while the AUD and NZD crashed by 2%. Elsewhere in FX, the CHF rallied 0.6% as flight-to-safety helped the Franc, and the JPY continued its recent short squeeze rally with a 2.3% gain.

Oil had another negative week in the general risk-off sentiment – last week, WTI fell nearly 3% to close at $76.41.

It was a tale of two halves for precious metals once again. Gold still reigns supreme with yet another very composed performance. On the other hand, silver had another major pounding, showing severe weakness during the illiquid Asian trading hours. It has now dropped 10% in two weeks and looks to be heading towards the original $26-$26.20 breakout level, which should be very good support. Last week, Gold fell 0.6% to close at $2,387, and Silver crashed 4.4% lower at $27.93.

Bonds rallied further last week – the 10y UST yield fell 5bps to close at 4.19%, and the 10y Bund rallied 0.5% to close at 132.668. Equities tried to find some support following the previous week’s sell-off, which was a mixed performance overall. The S&P500 index fell 0.8% to 5467 points, but the DAX rallied 1.3% to close at 18417 points.

Finally, crypto-currencies participated in the general market volatility last week. Like precious metals and Gold, Bitcoin proved resilient while others suffered. At the time of writing, Bitcoin was up 1% at $67,500, and Ethereum was nearly 8% lower at $3,230.

The Week Ahead:

Equities will attract all the attention next week, as bulls need to find some support around these levels if we are to avoid visiting much lower levels. Yields remain subdued and should help risk assets, but many economic data releases next week could wreak havoc. We have the Eurozone, Canada, Mexico’s GDP, US ADP, and NFP, and we also get interest rate decisions from the BoJ, BoE, and the Fed.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer, solicitation, or 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.

Markets in risk-off mode – crypto’s assume safe haven status

It was another volatile week, with equity markets finally displaying high volatility and breaking the recent slow “melt-up” trend. Markets sold off strongly last week, with the VIX closing above 16 for the first time in around three months, and the tech sector in particular looking vulnerable (the Nasdaq closed more than 5% lower from its peak last week).

The US Dollar usually performs well in a risk-off scenario, and it did indeed rally last week, but it still seems to be underperforming. Dollar bulls should be careful as this could be a temporary correction higher before a continuation lower. Last week, the DXY rose 0.3% to close at 104.365.

The Pound and the Euro lost some ground against the greenback but did well against the other majors. Inflation prints came in at 2% for the UK (at the BoE’s target and marginally higher than expected) and 2.5% for the Eurozone, as expected. The ECB left rates unchanged last week but has kept the door open for more cuts this year, especially if economic data weakens.

Commodity currencies had already shown weakness from the previous week and traded poorly again. The CAD performed best with a 0.7% drop, while the AUD, NZD and NOK dropped around 1.5% against the Dollar. Elsewhere in FX, the JPY strengthened 0.3% after the decisive BoJ intervention the previous week. The CHF gained 0.6%

Oil had a very bad week as risk assets sold off – the WTI fell 4.3% to close at $78.58. It remains in the middle of the very broad trading range of the past year, and it’s currently sitting on the 200DMA.

It was a tale of two halves for precious metals. Gold reigned supreme with a very composed performance in the middle of the elevated market volatility. It did retreat from its ATH peak, but it produced an almost flat week in the end, closing above $2,400. On the other hand, Silver got pummelled as the big market players continued to try and force a technical bear move. There is no reason for the massive underperformance against Gold so that these organised hammerings could yield excellent buying opportunities. Last week, silver fell over 5%, closing at $29.22.

Bonds usually perform well during risk-off moves but were strangely absent last week. The 10y UST yield rose 5bps to close at 4.24%, and the 10y Bund rallied 0.2% to close at 132.041.

Equities finally had a negative week, with lots of profit-taking and tech stocks getting crushed. This is, of course, very normal, given the prolonged grind. The “Trump Trade” suggests higher levels still, so bears should be careful as positioning gets shorter; the path of least resistance could be for higher levels. Last week, the S&P500 index fell 2% to close at 5512, and the DAX shed 3.1% to close at 18172 points.

Finally, crypto-currencies have become the flight-to-safety instruments of choice, as they performed magnificently in the face of a general sell-off. At the time of writing, Bitcoin and Ethereum are up around 10%, at $66,800 and $3,500 respectively.

The Week Ahead:

It will be all about equities next week and whether they can find some support. A second poor week in a row could break some important technical levels and make this the beginning of a broader move lower. Data-wise, we have Manufacturing and Services PMIs from around the globe, the BoC rate decision (expected to leave rates unchanged), and we close the week with the all-important US Core PCE reading.

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.

An assassination attempt on ex-President Donald Trump could have impact on markets Monday

An assassination attempt on ex-President Donald Trump hit the headlines late on Saturday night, and this will undoubtedly have an effect on US election predictions and markets on Monday morning.

Last week was characterised by a continuation of the general market trends. US CPI came in 0.1% lower than expected, confirming inflation’s (slow) downward trend. Markets greeted this inflation reading with joy as equity markets and risk assets rallied further. The BoJ intervened in the FX market to strengthen the Yen, which had a short-term effect on price, but will it hold?

In a notable move, the Pound outperformed following a stronger-than-expected UK GDP print, showcasing its strength as the Dollar falters. The Euro also gained almost across the board. EURGBP fell below 0.84 for the first time in a while and still looks bearish while below the critical 0.85 resistance level. Also, the EURUSD broke above 1.09 for the first time in over a month.

Commodity currencies should have done better, given the Dollar’s weakness and general market rally, but they underperformed severely. The CAD, AUD and NZD were within a +/- 0.5% range, and the NOK fell 1.7% following a weak Norway inflation print. Elsewhere in FX, the CHF was flat, and the USDJPY fell by 1.8% following the BoJ intervention.

Oil finally posted a negative week after a month of gains – last week, the WTI fell 1.4% to close at $82.14.

Precious metals were having a quiet week until the US CPI print, which caused them to shoot higher initially. However, they were met with severe selling pressure once again as shorts tried to make every breakout a technical failure. In the end, there was some success for sellers, but metals still look very strong overall. Last week, Gold closed 0.8% higher at $2,410, and Silver was 1.4% lower at $30.78.

Bonds had a second intense week in a row, following the disappointing inflation numbers and seeing yields drop. Last week, the 10-year UST yield fell 9bps to 4.19%, and the 10-year Bund rallied 0.6% to close at 131.796 points.

Equities continued their upward trend for another week. As we cautioned last week, shorts should be careful, and the market confirmed this need. The path of least resistance for equity indices remains upward, but we may be approaching a medium-term peak. It’s crucial to note that until there is technical evidence of a peak, shorting remains a risky proposition. Last week, the S&P500 index surged 1% to 5623, and the DAX gained 1.5% to close at 18748.

Finally, crypto-currencies breathed a sigh of relief after a disastrous month. The general risk euphoria and the attainment of important support levels are now making cryptos bounce across the board. At the time of writing, Bitcoin and Ethereum are up over 5% at $60,000 and $3,200, respectively.

The Week Ahead:

We wait to see the effects of the Trump assassination attempt on markets in a very data-heavy week ahead. We have inflation prints from Japan, Canada, New Zealand, the UK and the Eurozone. We also have the ECB interest rate decision (no change expected) and UK employment 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 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.

Disappointing US data put pressure on USD Index Global Trade

Last week was short due to the 4th of July US holiday, but it certainly didn’t lack excitement. We got another batch of US data that mostly disappointed—the headline Nonfarm Payrolls number may have come slightly above expectations, but the previous month’s revision was a lot lower. Also, US unemployment peaked at 4.1%, likely worrying Jerome Powell.

The US Dollar was under pressure throughout the week due to weak US data, and it never recovered. In the end, the DXY index closed 0.9% lower at 104.875.

The Pound and the Euro are experiencing similar market forces, with political uncertainty due to the UK and French elections. The Labour Party won in the UK in a landslide, but Labour governments are traditionally negative for Sterling. Marine Le Pen’s party had the majority in the first round in France, but it seems difficult for her to form a coalition government. Last week, both the GBP and EUR were up over 1% against the dollar, and they were also marginally higher than most other majors.

Commodity currencies relished the Dollar’s weakness and risk-on move, registering a strong week. The CAD gained 0.3%, the NZD gained 0.9%, and the AUD and NOK rallied 1.3% against the Dollar. Elsewhere in FX, the JPY was flat (and remains weak), and the CHF rose 0.3%.

Oil continued its rally for the fourth consecutive week but is now approaching a potential resistance point. Last week, the WTI surged over 2% to close at $83.29, but it may face a hurdle as it targets the trendline resistance at approximately $84.

Precious metals shot higher after what seems to have been three months of sideways consolidation. They remain bullish, and dips will likely continue to be bought. Last week, Gold rose nearly 3% to close at $2,391, and Silver shot 7% higher at $31.22.

Bonds reversed most of their previous losses, rallying strongly into the end of the week. The 10y UST yield closed 12bps lower at 4.28%, and the 10y Bund was broadly flat, just above the 131 level.

Equities left the month-end flows behind and resumed their path higher. The path of least resistance remains to the upside, and shorts should be very careful. Last week, the S&P500 index rallied 1.6% to close at 5567 points, and the DAX gained 1.3% to 18475 points.

Finally, crypto-currencies continue to exhibit unpredictability. Their correlation with risk remains broken – at least in the short term – and bulls have been disappointed for another week. At the time of writing, Bitcoin was down 7% to $57,000, and Ethereum was down 11% to $3,015.

The Week Ahead:

As the market digests Friday’s Nonfarm Payroll number and attempts to second-guess the Fed’s path forward, we get yet more important data releases next week. The US CPI will be in focus, but we also have inflation readings from Norway and the RBNZ interest rate decision.

Equities seem to be losing steam

We had a relatively quiet week for a change, but with month-end/quarter-end/half-year-end flows on Friday, some markets did manage to show some volatility. Unlike recent data releases, US data mostly beat expectations, while the all-important US PCE reading came in at 2.6% YoY, as expected.

The US Dollar had a second flat week in a row, consolidating its recent gains. The DXY index closed unchanged at 105.84.

The Pound and the Euro had another boring week, even as the UK and French elections loom, with the governing parties certain to lose this time.

Commodity currencies were also very quiet. The CAD was flat, the AUD gained 0.4%, and the NZD and NOK underperformed with losses of 0.4% and 1.1%, respectively. Elsewhere in FX, the CHF dropped 0.5%, and the JPY fell again with a 0.7% loss.

Oil rallied for a third week but is now losing momentum as it approaches resistance. Last week, the WTI rallied 1.1% to close at $81.44.

Precious metals couldn’t progress as yields rose and the USD remained firm, but dips continued to be bought. Last week, Gold was marginally higher at $2,326, and Silver fell 1% to close at $29.14.

Bonds traded flat most of the week, but month-end flows spiked higher on Friday. The 10-year UST yield ended the week 14bps higher at 4.40%, and the 10-year Bund fell 0.8% to 131.498 points.

Equities tried to rally for another week, but the month-end flows slowed their intra-week gains. The S&P500 index closed the week flat at 5481 points, and the DAX was marginally higher at 18235.

Finally, crypto-currencies continued to trade poorly, registering yet another negative week. Their correlation with equities is broken, and sellers still have the upper hand. At the time of writing, Bitcoin was nearly 5% lower at $61,500, and Ethereum was down 2.7% at $3,390.

The Week Ahead:

Thursday is the 4th of July US holiday, but that doesn’t mean the markets will be quiet! We have a few data-heavy days—manufacturing and services PMI readings from around the world and Friday’s Nonfarm Payrolls.