Weekly Market Recap

Last week was a grind, which is a welcome change compared to most of 2023 so far. Global economic data continue to surprise on the weak side, and this could well point to a widespread recession in the coming quarters.

The US dollar index still cannot find strength and continues to look weak. The DXY index bounced off the critical support at 100.80 and eventually closed the week flat at 101.7.

The euro and sterling both showed little movement following CPI releases for the eurozone (in line at 6.9% yoy) and the UK (higher than expected at 10.1% yoy).

Commodity currencies reversed last week's gains with a poor weekly showing. The AUD and NZD did best with only marginal declines, but the CAD and NOK underperformed with declines of 1.4% and 1.9%, respectively. Elsewhere in FX, CHF, and JPY traded mostly sideways all week.

Oil finally gave up some of its recent gains as it continues to trade volatile and violently. Last week, WTI fell nearly 6% and closed at $77.91.

Precious metals were always going to see a lower correction after the very strong performance in recent weeks. This could only be a temporary pullback before a new leg up. Last week, gold and silver both fell about 1% and closed at $1,983 and $25.09 respectively.

Equities again failed to sell off, no matter how bad the global environment is starting to look. The pain trade is still most likely upwards, and bears should be cautious. Last week, the S&P500 index crept 0.4% lower to 4133 points (still in the critical 4110-4115 support zone) and the DAX rose 0.4% to 15881 points.

Bonds are still trading in a range, with no clear direction at the moment. Last week, the 10-y UST yield rose 5bps to 3.57% and the 10-y Bund fell 0.5% to 133.707 points.

Finally, cryptocurrencies had a bad week, probably due to news of planned regulations in the EU. The good performance in recent weeks could now turn out to be a false breakout, and this would be a bearish technical event. At the time of writing, Bitcoin and Ethereum are both about 10% lower, at $27,400 and $1,870 respectively.

The week ahead:

The coming week could be interesting as some economic data will be released that could move the markets. We have the Bank of Japan's interest rate decision, the eurozone and US GDP, as well as the Fed's favourite inflation measure - the Core PCE Index.

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