The previous week provided a respite from recent heightened volatility, even with the NFP release. It was a shortened week due to the 4th of July celebrations and the 250th anniversary of the USA, with much anticipation around potential announcements from Donald Trump. Ultimately, it was a week of continued trend, with risk assets extending their rally.
The US Dollar weakened after several strong weeks, as the NFP data fell short of expectations. Consequently, the DXY index ended the week 0.5% lower at 100.878.
The Euro had a mixed performance as Eurozone CPI came in at 2.8% YoY, below the anticipated 3.0%.
The Pound showed strength against all major currencies, providing a positive shift for bulls. GBPUSD rose over 1% to close at 1.335, while EURGBP continued its downward trajectory at 0.8565.
Commodity currencies benefited from the rally in risk assets, with the CAD remaining flat, but the AUD, NZD, and NOK each advanced approximately 1% against the Dollar. In other FX movements, the JPY posted slight gains, and the CHF rose 0.8%.
Oil prices remained under pressure as tensions in Iran eased, with expectations of a near-term resolution. WTI dropped another 2%, closing at $68.77.
Precious metals rebounded after the previous week’s losses, gaining strength following the weak NFP data. Gold ended the week 2% higher at $4,175, and Silver rose 5% to $62.40. Could this indicate a bottom for metals?
Bonds broke their recent upward trend, signalling weakness. The 10-year UST yield rose 10bps to 4.48%, while the 10-year Bund fell 0.6% to 126.573.
Equities quickly shook off any pressure, with the weak economic data serving as a catalyst for a rally. The S&P500 index climbed over 2% to close at 7499, and the DAX increased by 4.5% to 25779. There remains no technical evidence of a peak in equities, despite recent softness in Tech/AI stocks.
Lastly, cryptocurrencies outperformed equities but remain volatile and generally weak. At the time of writing, Bitcoin is up nearly 4% at $63,000, and Ethereum is up nearly 10% at $1,750.
The upcoming week may be relatively quiet in the absence of major economic data. An RBNZ rate decision is expected, but no changes are anticipated. Additional PMIs are also expected, but overall, it could be a typically quiet summer week.
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