The FOMC rate decision and US inflation data dominated the week that passed, and CPI (both headline and core) came in at 0.1%, which is softer YoY than expected. This helped the markets move higher again, as the numbers could help the Fed move to a more accommodative stance. The European elections showed a definite shift to the right, with many governments losing much ground – France’s Macron, in particular, calling for general elections after a resounding defeat.

The US Dollar didn’t show much movement all week, even after the US CPI numbers. However, it finished the week strongly as the other majors (particularly the EUR) lost ground on Friday. The DXY index gained 0.6% last week, closing at 105.517.

The UK saw mixed economic data (strong earnings but weak manufacturing and industrial production), so the Pound moved slightly lower. The main event was the EURGBP dropping below the critical 0.85 support level, which makes the pair bearish in the near term.

The Euro had a bad week as political uncertainty rose following the European elections. The right and far-right parties gained much ground. One of the major rating houses downgraded French debt, and the single currency dropped nearly 1% against the dollar.

Commodity currencies moved marginally higher as risk-on prevailed and oil rallied. Last week, the AUD and NZD rallied 0.5%, the NOK gained 0.4%, and the CAD rose 0.2% against the USD. Elsewhere in FX, the JPY fell around 0.3%, and the CHF rallied 0.7%.

Once again, oil has proven its unpredictability, showcasing high volatility and rapid direction changes. Last week, the WTI experienced a significant rise of 4% to close at $78.44, underlining the need for constant vigilance in market analysis.

Precious metals, showing their potential, reversed some of last week’s losses, with Gold again outperforming the rest. The price pressure on Silver has been immense during the past few sessions, as it strives to find some support in the $29s. Last week, Gold and Silver rallied around 1.5% to close at $2,332 and $29.55, respectively, offering a glimmer of hope for investors.

Bonds continued their recent rally and still look very strong. Central bank cuts have started, and now all eyes are on the Federal Reserve. Last week, the 10-year US yield fell 20bps to close at 4.23%, and the 10-year Bund rallied over 2% to close just below the 133 mark.

Equities know only one direction these days, and weak economic data are helping them move higher. Last week, the S&P500 index rose 1.6% to 5429 points, but the DAX fell 3% at 18002 points following the European election results.

Finally, crypto-currencies are still unable to find strength, even as risk assets rallied. They are underperforming at the moment – at the time of writing, Bitcoin and Ethereum are down 4% at $66,300 and $3,520, respectively.

The Week Ahead:

Another volatile week likely awaits. We have interest rate decisions from the RBA, the SNB, and the BoE, as well as inflation from the Eurozone, the UK, and Japan. The pain trade in equities and risk assets still seems to be to the upside!