Weekly Market Recap

Markets finally got a reprieve last week in the absence of key market-influencing data and economic surprises. The week's main event was the BoJ disappointing the markets by taking no action in its interest rate decision. The U.S. dollar, interest rates and stocks all experienced a sideways choppy week, with little progress in either direction.

The US dollar index initially moved lower following disappointing U.S. PPI data but showed little direction during the week. The DXY index advanced 0.2% lower and closed just below the 102 level.

The euro should have outperformed as ECB members (including President Lagarde) continued their hawkish talk. They predict more 50-bp increases in the future and this begins to show a difference in policy between the ECB and other major central banks. The 1.087 resistance in the EUR/USD was respected and the pair closed 0.2% higher at 1.0855.

The pound was one of the best-performing currencies last week as the CPI for the U.K. came in as expected at 10.5% annualized. GBP/USD rose 1.4% and closed just below the 1.24 level, while EUR/GBP fell more than 1% to 0.8753.

Commodity currencies traded flat, with the exception of the NZD which underperformed with a 1.4% drop. Elsewhere in FX, the Yen fell 1.3% and the CHF gained 0.7% against the dollar.

Oil remained strong and recorded another positive day - WTI rose more than 2% and closed at $81.66.

Precious metals took a breather after their recent good performance and posted a relatively quiet week. Gold rose 0.3% to $1,926 and silver fell 1.4% to $23.91.

Equities are still doing relatively well, given the deteriorating global economic situation, but momentum is waning. The S&P500 index hit key resistance around 4,000 points but closed the week 0.7% lower at 3971 points. The DAX also fell 0.3% last week, closing at 15090 points.

Bonds continue to trade well despite the hawkish attitude of some major central banks. Last week, the 10-year UST yield fell 2bps to 3.49% and the 10-year Bund rose 0.1% to 138.162 points.

Finally, cryptocurrencies continue to climb higher. Momentum has been strong over the past 3 weeks and the bulls are still firmly in control. At the time of writing, Bitcoin is over 11% higher at $23,000 and Ethereum is over 7% higher at $1,635.

The week ahead:

The week ahead should be lively as we are near critical levels in many instruments. US 10-year yields have hit key support, and if that continues, we could see a spike in the USD and a risk-off move.

In terms of data, we have the latest GDP printout from the US, as well as key inflation data from the US, Japan, Australia and New Zealand.

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