Weekly Market Recap

The US dollar index remains under heavy pressure as US economic data continue to disappoint and the Fed is getting closer to its pivot. However, positioning is now very short and the sentiment is very bearish, so short-squeeze rallies are to be expected. Last week, the DXY index tested the super-important 100.80 lows before rebounding higher. It eventually fell 0.5% to 101.581 points.

The euro remains stronger as the ECB is clearly more hawkish than the Federal Reserve, BoE and BoJ. The EUR/USD broke through the high 1.10 level and closed there with a weekly gain of almost 1%.

Sterling consolidated last week's gains and posted a flat week. Next week's UK CPI and PMI data could trigger further upward movement.

Commodity currencies rose while risky assets showed further resilience. The AUD rose 0.7%, while the CAD and CHF gained 1.2%. The week's losers were the NZD and JPY with 0.7% and 1.2% declines, respectively.

Oil still feels the effects of the recent OPEC production cuts and supply remains tight. Last week, WTI rose another 2.8% and closed at $82.64.

Precious metals performed well again all week but reversed on Friday following the strong dollar. Gold ended the week mostly flat at $2004, and is still just $70 away from its all-time highs. Silver again outperformed, breaking above the $26 level mid-week. Ultimately, silver closed the week 1.7% higher at $25.38.

Equities just cannot sustain a sell-off these days, and last week was a perfect example of that. It feels like the market remains a concise risk, as every dip continues to be bought. There are many reasons to go short in equities, but the price action indicates that the pain trade is even higher. Last week, both the S&P500 and the DAX rose about 1% and closed at 4151 and 15825 points, respectively.

Bonds finally reversed something of the recent trend, with a relief rally in interest rates. Last week, the 10-year UST rate rose 23bps to 3.52% and the 10-year Bund fell 2.1% to 134.336 points.

Finally, cryptocurrencies made an upward technical breakout and advanced. At the time of writing, Bitcoin is more than 8% higher at $30,400 and Ethereum is more than 12% higher at $2,100.

The week ahead:

The week ahead is full of data, with inflation data from the eurozone, the UK, Canada and New Zealand. There are also the latest PMI readings and employment figures from the UK. Equity markets will be in focus as we head towards crucial resistance in the S&P500 - will the short squeeze continue?

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