We said last week that “…all eyes will also be on yields and the Dollar, which will likely resume their move lower” – and this is exactly what transpired. The general trend continued, with equities finding strength as volatility subsided and the greenback lost ground.

The US dollar had one sideways and couldn’t bounce at all. Last week, the DXY index fell 0.7%, closingat 102.402 points. US economic data remains mixed, and headline CPI fell to 2.9% YoY; this makes the Fed’s job easier to start the cutting cycle in September.

Sterling had a good week as UK economic data remains decent, even if CPI fell to 2.2%. Last week, the GBPUSD rallied 1.4% to close well above 1.29. The Euro had another quiet week, as Eurozone GDP aligned with expectations at 0.3% QoQ.

Commodity currencies had a third intense week in a row, helped by the Dollar dip and risk rally. Last week, the CAD gained 0.4%, the NZD rallied 0.9 (even as the BRNZ cut rates), the NOK gained 1.2% as Norges Bank held steady, and the AUD outperformed with a 1.5% rise. Elsewhere in FX, the CHF was broadly flat, and the JPY fell 0.6%.

Oil is still in a constant state of see-saw action, with elevated volatility but no clear direction. Last week, the WTI fell over 2% to close at $75.41. Precious metals had a very good week, and for once, Silver outperformed.

Gold hit new all-time highs, closing the week 3.2% higher at $2,508. Silver registered a 5.8% rally, closing above $29. Technically Gold looks better than silver and platinum, and shorts should tread very carefully.

Bonds rallied modestly last week as more rate cuts were priced into the curve for the Federal Reserve and other central banks. The 10-year UST yield fell 5bps to close at 3.89%, and the 10-year Bund was broadly flat at 134.347.

Equities had a solid week, resuming their upward move and still showing no technical evidence of a significant correction lower. Last week, the S&P500 index rallied over 4% to close at 5558 points, and the DAX gained 3.4% to close at 18322.

Finally, crypto-currencies traded poorly, given the Dollar’s weakness and risk-on sentiment last week. At the time of writing, Bitcoin is 1.5% lower at $59,500, and Ethereum is flat at $2,615.

The Week Ahead:

The drop in yields and the Dollar will likely continue in the weeks ahead, bringing more strength to equities (barring any major geopolitical developments). Data-wise, we have inflation readings from the Eurozone, Canada, and Japan, and we also get a wide range of PMIs from across the globe. However, all eyes will be on the Jackson Hole Symposium and Jay Powell.

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.