Skip to content

Precious Metals Surge, Dollar Strengthens, and Equities Rally Amid Volatility

Another volatile week has passed, with plenty to talk about! There was no further escalation in the Middle East, which caused oil to move lower. The ECB cut 25bps as expected, with Lagarde striking a dovish tone once again. CPI releases disappointed in the UK, the Eurozone, and Canada, while US retail sales beat expectations. Finally, precious metals stormed higher, with Gold hitting new ATHs and Silver breaking above important resistance.

The US Dollarrose against most majors due to USD strength and other currency weakness. Last week, the DXY index rose 0.5% to close at 103.463, but momentum seems to be slowing.

The Euro retreated marginally following the ECB 25bp cut and Christine Lagarde’s continued dovish tone.

The British Pound advanced slightly, with economic data remaining very mixed (low CPI and high Retail Sales).

Commodity currencies had a third negative week as oil traded poorly and the Dollar rallied. Last week, the CAD fell 0.3%, the AUD and NZD shed 0.6%, and the worst performer was the NOK with a 2% drop. Elsewhere in FX, the JPY posted marginal losses, and the CHF fell by 0.9%.

Oil finally gave up most of its recent gains in the absence of Middle East escalation. However, oil remains very volatile and prone to big headline-induced moves, so it needs to be traded with extra caution. Last week, WTI fell nearly 9% to close at $68.78.

Precious metals were firmly focused last week as gold and silver made new highs. Gold rallied 2.4% to close at $2,722, anticipating more currency devaluation due to the ever-increasing government debt. Silver rallied nearly 7% to close at $33.71, taking out the previous high at $32.75 and looking unstoppable for now.

Bonds ended two weeks of losses with a marginally positive one. Last week, the 10-year UST yield fell 1bp to 4.09%, and the 10-year Bund rallied 0.6% to close at 134.107 points.

Equities just don’t seem to have any reason to move lower, and the path of least resistance remains to the upside. Last week, the S&P500 index rallied 1% to close at 5873, and the DAX gained 1.4% to close at 19657 points.

Finally, crypto-currencies retained their correlation with risk, and they push further higher whenever Trump seems to gain ground in the upcoming US elections. At the time of writing, Bitcoin is up 8% at $68,300, and Ethereum is 7% higher at $2,640.

The Week Ahead:

As we approach the US elections, markets are bound to become more edgy and volatile. All eyes will also be on the Middle East situation, hoping for no further escalation. Data-wise, we have a wide range of PMIs and US durable goods orders on Friday.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell any financial instrument. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this newsletter or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.

Author

Posted on

Categories

No comment yet, add your voice below!


Add a Comment

Your email address will not be published. Required fields are marked *

×