The markets were nervous last week due to the ongoing uncertainty between Iran and Israel. Equities traded heavily throughout the week, with more pressure probably added because Friday was options expiration day.

The US Dollar was supported throughout the week, historically being one of the go-to currencies when risk-off prevails. Ultimately, the DXY index closed the week broadly flat, just above the 106 level.

The Euro and the Pound were both pretty quiet last week. The ECB and the BoE are expected to start cutting rates before the Fed, and economic data supports this view.

Commodity currencies were weak, with rising yields and risk-off not helping them. The AUD, NZD, and NOK were down around 1% against the greenback, while the CAD closed roughly flat.

Oil saw elevated volatility due to the Iran-Israel events, and in the end, the WTI closed the week almost 4% lower at $82.07.

Precious metals picked up more strength following the very weak close of the previous week. They are seeing more inflows and a flight to safety. As a result, Gold rallied 2% to close at $2,392, and Silver gained nearly 3% at $28.68.

Equities were hit due to the Iran-Israel escalation and options expiration on Friday. As things de-escalate, we should see more strength in the week ahead. Last week, the S&P500 index fell over 3% to close at 4969, and the DAX shed 1.1% to close at 17737 points.

Bonds moved lower for the second week in a row. Last week, the 10-year UST yield rose 9bps to close at 4.62%, and the 10-year Bund fell over 1% to close at 131.02.

Finally, crypto-currencies are trading erratically as the market decides whether they are a flight-to-safety asset or a risk proxy. At the time of writing, Bitcoin was 1% higher at $65,200, and Ethereum was up almost 4% at $3,190.

The Week Ahead:

All eyes will still be on the Iran-Israel situation, anticipating some de-escalation. We will likely see a relief risk-on rally, but economic data will also play a big part. We get a wide range of Manufacturing and Services PMI readings and the BoJ Interest rate decision, and we close the week with US Core PCE.

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