The past week was eventful, with tensions between Iran and the US intensifying and tech stocks finally experiencing some downturn. Currency markets remained mostly stable, but oil was once again the most volatile asset.
The US Dollar had a subdued week, unexpectedly underperforming despite the Iran conflict and a general risk-averse sentiment. The DXY index dropped by 0.2%, settling at 100.754.
The Euro and the Pound saw little movement for the second consecutive week, as there were no surprising economic data releases.
Commodity currencies enjoyed a third week of gains, benefiting from rising oil prices. The AUD increased by 0.4%, the CAD by 1%, and both the NZD and NOK rose by 1.5% against the Dollar. Meanwhile, the CHF remained unchanged, and the JPY decreased by 0.4%.
Oil prices continued to climb, driven by the ongoing conflict in Iran, with WTI surging nearly 15% to close at $81.78, and are expected to remain strong if the situation persists.
Precious metals had another challenging week, suggesting a potential bottom might be near. Gold dropped by 2.5% to $4,017, and Silver plummeted over 6% to $55.90.
Despite the rise in oil prices, bonds showed unexpected resilience, with the 10y UST yield slightly decreasing by 1bp to 4.55%, and the 10y Bund falling by 0.6% to 124.802.
Equities declined, particularly tech and AI stocks, prompting speculation about a potential shift towards blue-chip stocks. The S&P500 index fell by 1.6% to 7,449 points, and the DAX declined by 0.9% to 24,831.
Cryptocurrencies remained mostly stable despite the decline in risk assets, which is encouraging for bullish investors, but one week doesn’t define a trend. Currently, Bitcoin is slightly down at $63,900, and Ethereum is up by 1% at $1,840.
Looking ahead, oil seems to be the primary market driver, with central banks likely reacting to rising oil prices and potential inflation. However, market dynamics can quickly shift with new developments.
Key data releases include inflation figures from Canada, New Zealand, the UK, and Japan, the ECB’s interest rate decision, and several PMIs.
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