It was a busy week of central bank interest rate decisions and no shortage of surprises! The Fed kept rates low as expected, but the BoE and SNB kept rates unchanged in a clearly dovish turn. We are now really very close to the point where all major central banks are reaching the end of this rate hike cycle.

The US dollar experienced another week of marginal gains and although the dollar looks strong overall, momentum has waned. Last week, the DXY index rose 0.2% and closed at 105,582 points.

The Euro had a relatively quiet week as the focus shifted to the dollar and the pound. The Eurozone CPI came in 0.1% lower than expected, but that was not enough to cause major volatility.

Sterling remains in a downtrend and the fact that the BoE kept interest rates on hold put more pressure on the currency. UK economic data remain weak, so this downward trend is likely to continue.

Commodity currencies outperformed for the first time in a while and gained ground even as risks eased and interest rates rose. The AUD and CAD posted marginal gains, but the NZD rose 1.1%. Elsewhere in FX, the dovish BoJ caused the JPY to fall 0.4%, while CHF fell about 1% against the greenback.

Oil finally pulled back last week, but remains in a clear uptrend. Last week, WTI fell 1% and closed at $90.29.

Precious metals had another good week, especially given the rise in interest rates and the dollar. Last week, gold rose marginally to $1,925, while silver rose more than 2% to $23.55.

Equities are finally starting to show signs of weakness – could they start to overtake negative global fundamentals? High yields should eventually put downward pressure on equities, but central banks turning dovish should provide support. Last week, the S&P500 index fell 3% to 4318 points and is now looking to test strong support at 4200, which was the original breakout level. Last week, the DAX index fell more than 2% to 15550 points.

Bonds are still trading weak – the 10-y UST yield broke above resistance and closed 12bps higher at 4.44%, while the 10-y Bund fell 0.5% to 129.607.

Finally, cryptocurrencies are consolidating again and this means the next move should be powerful. They are clearly correlated with risk, but at the moment the lower equity move is not affecting them. At the time of writing, Bitcoin is flat at $26,500 and Ethereum is $40 lower at $1,600.

The week ahead:

All eyes for the week ahead should be on returns. If the higher breakout is confirmed, risky assets are likely to continue to move lower. In terms of data, it is another busy week, with the focus on US GDP and Core PCE releases.

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