Weekly Market Recap

Another volatile week came to an end, with plenty of central bank action and market volatility.

The Federal Reserve began with a long-awaited 25bp increase, but Jay Powell failed to take an excessively hawkish stance. His guidance is now "a few more" 25bp increases, meaning we are getting very close to the Fed's long-awaited pause. The ECB and BoE both raised by 50bp, but their guidance was also slightly on the dovish side. It is becoming clear that as inflation eases, central banks are keen to reduce the pace of tightening to avoid a hard landing.

However, the main surprise of the week was the US Nonfarm Payrolls figure, which strongly surprised the upside. US employment remains strong, and this could likely influence future Federal Reserve policy decisions.

The US Dollar Index, after moving slowly and steadily lower for weeks, finally found some traction. The great NFP figure certainly helped the greenback regain a lot of ground against most majors. Last week, the DXY index rose 1% and closed just below the 103 mark.

The euro continues to gain support from the ECB's stance, which expects at least 2 more 50bp hikes in the near future. The single currency fell against the dollar last week but rose 2% against GBP, AUD and NZD.

The pound remains weak as the BoE refuses to sound hawkish and UK economic activity continues to stagnate. Last week, GBP/USD fell as much as 2.7% and closed at 1.2051.

Commodity currencies were under pressure all week as the dollar rose and oil weakened. Friday's NFP figure was the nail in the coffin, sending these currencies to new lows. The AUD and NZD fell about 2.5% against the dollar, and the best performer was the CAD with a 0.7% drop. Elsewhere in FX, the CHF fell 0.6% and the JPY more than 1%.

Oil remained lower for the second week in a row, due to erratic and volatile price action. Last week, WTI fell almost 8% and closed at $73.18.

Precious metals had a relatively tame week, until Friday's NFPs, after which very heavy selling entered the market. Silver tested very important resistance at $24.50, but failed convincingly. Last week, gold fell 3.2% and closed at $1,866 and silver crashed more than 5% and closed at $22.35.

Equities still look very strong and view any market development as positive. Federal Reserve not hawkish enough? Rally. Strong US economic data? Further rally. The path of least resistance still seems to be higher, so shorts should be cautious. Last week, the S&P500 index gained 1.6% and closed at 4134 points and the DAX rose 1.8% to 15410 points.

Bonds are still denying the possibility of more hawkish central banks and their "higher for longer" rates. Strong US economic data did not trigger a lower move, which is a sign of strength. Last week, the 10-y UST yield rose 1 bp to 3.53% and the 10-y Bund rose marginally to 137.781 points.

Finally, cryptocurrencies are showing remarkable resilience. They seem to be holding up and the risk-on sentiment is certainly helping. At the time of writing, Bitcoin is over 1% higher at $23,300 and Ethereum is 5% higher at $1,650.

The week ahead:

The coming week will be crucial as markets wait to see if last week's moves continue. In terms of data, we have interest rate decisions from the RBA, and we also get important inflation data from Japan and Germany.

Disclaimer:?Foreign exchange, futures, options, equities, CFDs, commodities and other securities trading investments on margin are complex and carry the risk of substantial losses. They are not suitable for all investors. The ability to withstand and adhere to a particular trading programme in spite of trading losses are material points which can adversely affect investors' returns. Past performance is not indicative of future results.

Market Commentary:?This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy 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.?