The summer months are usually quiet in the markets, but this year was different. The main event last week was the release of the US Consumer Price Index, which missed by 0.1% but sent yields and the dollar higher.

The US dollar had another good week as more and more short selling was covered, providing support for the greenback. The DXY index rose 0.8% to 102.853 and we are now approaching key resistance at around 103.50.

The euro had a mixed week as German economic data remained weak. The EURUSD fell 0.6% to close at 1.0945, while the EURGBP traded broadly unchanged.

Sterling saw some strength after the robust GDP data, but this quickly fizzled out by the end of the week. Cable closed the week 0.4% lower at 1.2692.

Commodity currencies saw a second consecutive poor week as the dollar rose and risk traded strongly. CAD fell 0.5%, AUD fell 1.1%, NZD lost 1.9% and NOK was the worst performer with a 3% slump. In the FX market, the CHF and MXN did not make much headway and the JPY saw further weakness, closing the week down 2.3% against the dollar.

The oil price recorded 7 positive weeks in a row and has now overcome resistance. As OPEC supply remains tight, WTI is able to extend its recent gains (+0.5% last week, closing at $83.01).

Precious Metals posted their third negative week in a row and always seem to be on the defensive. Higher yields and a stronger dollar always lead to a knee-jerk reaction downward in the metals. Last week, gold fell 1.4% to close at $1,914 and silver fell 4% to close at $22.69.

Equity markets experienced a turbulent week but ended the week largely unchanged. The S&P500 tested support at around 4450 but recovered to close roughly unchanged, as did the DAX.

Bonds continued their downward trend, with yields heading for new highs. Last week, the 10-year UST yield rose 10 basis points to 4.16%, and the 10-year Bund fell 0.7% to close at 131.357 points.

Finally, cryptocurrencies consolidated for another week as they prepare for the next big move. With risks under pressure, we could see a downward move soon, but for now, there is no clear direction. At the time of writing, Bitcoin and Ethereum are both around 1% higher at $29,400 and $1,850 respectively.

The week ahead:

The week ahead should be interesting once again as we approach some very important levels – notably the 4440-4450 support level in the S&P and the 4.20% high in the US 10-year yield.

On the data side, inflation data is due from the UK, Eurozone and Canada, as well as GDP data from Japan, the Eurozone and Norway. Finally, interest rate decisions are due from the RBNZ and Norges Bank.

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