Another data-packed week passed, and there were reasons to cheer for both sides of the markets. The discrepancy between US ADP and NFP employment figures became more apparent. Fed chairman Powell was once again hawkish, but equities still didn’t care about anything and recorded further new highs.

The FOMC rate decision helped the US dollar, with Powell ruling out the possibility of a rate cut in March. Bursting NFP data also boosted the DXY, closing the week +0.5% at 103.962.

The Euro still cannot muster any strength, and although EU GDP and CPI were both 0.1% better, the single currency fell marginally against most majors.

The Pound had a tranquil week and showed little movement, even though one of the MPC members voted for a rate cut last week.

Commodity currencies continue to be hampered by oil selling and the dollar’s rally. Last week, the CAD managed to close flat, but the NZD fell 0.4%, the AUD dropped 1%, and the NOK crashed 2.6%. Elsewhere in FX, the JPY remained flat, and the CHF fell 0.4%.

Oil remains highly volatile! Last week’s 6% rally was completely reversed, with WTI crashing 7.4% lower and closing at $72.31.

Precious metals continue to trade sideways, but they look constructive, with gold, in particular, appearing to be in a major consolidation before another push towards ATHs. Last week, gold rose 1% to $2,039 and silver fell 0.5% to $22.69.

Equities continued with their bullish trend and ignored all reasons to retreat lower. The path of least resistance still seems to be towards higher levels, hunting for more ATHs. Last week, the S&P500 index rose 1.4% to 4955 points, and the DAX fell marginally to 16918 points.

Bonds seem unable to hold a significant move lower and showed more strength last week, even as US economic data surprised. Last week, the yield on the 10y UST fell 12bps to 4.02%, and the 10y Bund rose 0.6% to 135.083.

Finally, cryptocurrencies had a quiet week, tracking mostly risky assets. At the time of writing, Bitcoin is 3% higher at $43,000 and Ethereum 1% higher at $2,300.

The week ahead:

The coming week should be very interesting as markets digest US payroll data, and the Fed’s first rate cut is likely to be entirely priced out of March. Regarding data, we have interest rate decisions from the RBA and Banxico, and we also have services PMI data from several countries.

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