The US CPI came in marginally weak on Wednesday, and markets embarked on a broad rally for the remainder of the week. Equities performed well, as did cryptos, but all eyes were firmly on precious metals and copper, which exploded higher.

The US Dollar fell again as US economic data continued to disappoint, and focus remains on the US debt situation. Last week, the DXY index fell 0.8% and closed at 104.497.

The Euro had a decent weekly performance even though ECB members confirmed once more that a June rate cut is a certainty. The EURUSD rose nearly 1% to close at 1.0867 and is gunning for 1.10 resistance.

Better-than-expected earnings data helped the pound, and it continues to perform well. Last week, the GBP rallied 0.5% against the EUR and 1.4% against the USD.

Commodity currencies loved the risk-on move and the Dollar weakness, registering one of their best weeks in recent months. The CAD gained 0.4%, the AUD and NOK rallied 1.5%, and the NZD flew almost 2% higher against the Dollar. Elsewhere in FX, the JPY and CHF were broadly flat…

Oil followed other commodities higher – WTI rallied 1.7% to close the week at $79.46.

Precious Metals had an absolute monster of a week! The macro-environment had been very bullish for a while, and last week seemed to be the catalyst for a big move higher. Gold rose 2.3% to close at $2,414 and is now very close to printing new all-time highs. Silver broke above the vast $30 resistance level and quickly took out $31! Ultimately, Silver closed the week nearly 12% higher at $31.50.

Bonds rallied as more US rate cuts were priced into 2024. The 10-year UST yield fell 8bps to 4.42%, and the 10-year Bund was broadly flat at 130.668.

Equities remain strong, and the path of least resistance is still on the upside. Last week, the S&P500 index rose 1.7% to new ATHs 5306, and the DAX was marginally lower at 18704 points.

Finally, crypto-currencies were bound to rally as risk got bid, and that’s precisely what they did. At the time of writing, Bitcoin was nearly 10% higher at $67,000, and Ethereum was 7.7% higher at $3,135.

The Week Ahead:

It might not make much sense, but risk-on sentiment may well continue in the coming weeks. Bond strength and US Dollar weakness should continue to lift equities, commodities, and cryptos. Data-wise, it’s a busy week, with CPI readings from Canada and the UK, more PMIs, and the RBNZ interest rate decision.

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