Another lively week ended, and markets remain focused on inflation and unemployment data. The BoJ intervened in the FX market to support their faltering currency, and the US Dollar fell after a dovish Federal Reserve and softer-than-expected NFP.

The US Dollar saw selling pressures as US economic data disappointed and Jay Powell was dovish (rates unchanged, but the pace of QT was reduced by more than expected). The DXY index fell 1% to close at 105.076 last week, partially driven lower by JPY strength.

The Euro and Sterling had another relatively quiet week without significant surprises.

Commodity currencies took advantage of USD weakness and rallied across the board even though oil sold off hard last week. The AUD, NZD and NOK rallied over 1% against the greenback, while the CAD underperformed and registered a flat week. Elsewhere in FX, the CHF rallied 1%, and the week’s winner was the JPY with a post-intervention 3.4% rally vs. the Dollar.

Oil is still a volatile beast, with big weekly swings. Last week, the WTI crashed 6.8% lower and closed at $77.93.

Precious metals remained under pressure in what looks like a technical correction lower within a general uptrend. A drop in yields and the Dollar should theoretically bring strength to metals after we move out of the overbought territory. Last week, Gold fell 1.6% to close at $2,301, and Silver fell 2.4% to close at $26.56.

Equities and risk assets generally liked the dovish Fed and NFP miss. Last week, the S&P500 index rallied 0.7% to close at 5136 points, and the DAX fell 0.9% to close at the 18000 level.

After three weeks of selling pressure, bonds finally rallied, driven by the dovish Fed and worsening global economic conditions. The 10-year UST yield fell 15bps to 4.52%, and the 10-year Bund rallied 0.7% to close at 131.097.

Finally, crypto-currencies saw heavy selling pressures throughout the week, with Bitcoin breaking below the all-important $60k level mid-week. However, the broad risk rally after the FOMC meeting lifted cryptos, and they managed to salvage the week. At the time of writing, Bitcoin was broadly unchanged at $63,800, and Ethereum was down 3% at $3,135.

The Week Ahead:

The markets will digest last week’s events, and risk assets will likely continue to strengthen. Data-wise, we have more PMIs and interest rate decisions from the RBA and BoE.

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