Another lively week came to an end, with Nonfarm Payroll data surprising on the upside and yields continuing their upward trajectory. However, it was a quiet week for FX and equities, with most major FX pairs and equity indices ending the week largely unchanged.

The US Dollar Index (DXY) finally broke its record-breaking weekly positive streak and recorded a marginally negative week. Strong JOLTs and NFP data failed to push the greenback higher, although a pullback after such an extraordinary run is always expected.

The Euro and Pound also had a very quiet week due to the absence of key data releases.

Commodity currencies were the only real movers this week in FX land, as rising yields put more downward pressure on them. Last week, the NZD remained broadly flat, the AUD and CAD fell about 0.6% and the NOK lost 2% against the dollar. Elsewhere in FX, the JPY was flat, the CHF gained 0.6% and the MXN was a disaster with a 4.3% crash.

Oil finally showed weakness after months of outperformance. Last week, WTI fell 8.8%.

Precious metals continued their decline after last week’s carnage, further squeezed by rising yields. However, the obvious question is why metals should fall when inflation is driving up the price of most assets – especially since gold has proven to be a good inflation hedge in recent decades. Last week, gold fell 0.9% to $1,832 and silver dropped 2.7% to $21.59.

Equities remain resilient (as we said in last week’s newsletter) in the face of rising yields and deteriorating global economic data. Last week, the S&P500 index rose 0.4% to 4307 points and the DAX fell 0.5% to 15271 points.

Bonds have been trading one-way for weeks now and there seems to be no bid at all. However, the “longer higher” story may be in jeopardy as even central bankers are starting to sound alarm bells for the global economy. For now, however, momentum is clearly down for bonds and that should be respected. Last week, the yield on the 10y UST rose another 21bps and closed at 4.78% and the 10y Bund fell 0.4% and closed at 127.817.

In conclusion, cryptocurrencies are still trading relatively well and have built a pretty good support base. They remain well correlated with risk, so bulls should be aware that a sell-off in equities is also likely to drag cryptocurrencies down. At the time of writing, Bitcoin is almost 4% higher at $27,900 and Ethereum is 1.8% lower at $1,640.

The week ahead:

Next week is all about yields again, although their correlation with the dollar and equities seems to be weak lately. In terms of data, it is all about inflation, with readings from Mexico, Norway, Germany and the US.

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