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.

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