Last week, we said the focus should be on yields again, but that was different. Instead, commodities were in the spotlight, but for the wrong reasons. US wage data beat expectations, and interest rates increased slightly, while commodities crashed lower.

The US dollar finally had a positive week, helped by better-than-expected US economic data. The DXY index rose 0.8% to 103,983, but bulls should be cautious as this could be a short bear market rally.

The euro had another bad week as economic data from the eurozone (especially Germany) remained weak. The single currency lost more than 1% against the dollar last week, closing at 1.0759.

Sterling had a disappointing week with a decline of about 1% against the USD and 0.2% against the euro and only managed to remain broadly flat against commodity currencies.

Commodity currencies had a terrible week as commodities crashed lower and the dollar strengthened. The CAD did best, with a 0.6% decline against the USD. The AUD and NZD fell 1.5%, and the NOK crashed more than 2% lower. Elsewhere in FX, the CHF sold off about 1%, but the week’s winner was the JPY with a 1.2% rally, following hawkish comments from the BoJ.

Oil continues to move lower, with falling demand overshadowing potential supply cuts. Last week, WTI fell more than 4% and closed at $71.21.

Precious metals were the stars of the previous week, and we said a pullback was possible. Well, the pullback came, and it came with a vengeance! Gold broke to new ATHs near $2,150 during early Asian trading on Sunday night, but then it was beaten lower by a powerful force in the following days. This was an apparent attempt to force a significant technical “false breakout” and it worked very well indeed. The spike in new ATHs caused many stops to be eliminated and new longs to be initiated – these are now being unwound as the metals move lower. However, we should not forget that the move higher was impulsive and for good reason. Therefore, once this technical move is completed, it is likely that we will see new ATHs again. Last week, gold fell 3.2% to $2,004 and silver crashed almost 10% lower and closed below $23.

Equities just kept going, seemingly oblivious to what was happening in other markets. The pain trade still seems to be higher, and the price action proves this. Last week, the S&P500 closed 0.2% higher at 4603 points, and the DAX rose 2.2% to a new ATH of 16759 points.

Bonds took a breather after last week’s monster rally but still cannot be willing to go lower. Last week, the 10y UST yield rose 3bps to 4.23% and the 10y Bund rose 1.1% to 134.738.

Finally, cryptocurrencies remain bullish, showing more strength and rallying further. At the time of writing, Bitcoin is more than 11% higher at $43,900, and Ethereum is 8.5% higher at $2,350.

The week ahead:

The week ahead is going to be huge! We have Fed, ECB, BoE, SNB, Banxico and Norges Bank interest rate decisions. While not much is expected regarding interest rate changes, the statements and forward guidance will be very important, as always.

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.