Weekly Market Recap

Volatility is back! Donald Trump was inaugurated last week, and—as expected—he started with a bang! Many executive orders have been passed, promising a much leaner government and stricter measures with the US’s trading partners. Let’s see what gets implemented and what the effect is on markets.

The US Dollar moved sharply lower last week, immediately reflecting Trump’s well-known preference for a weak dollar. The DXY index fell 1.8% to close at 107.465.?

The Euro gained against the USD but mainly traded sideways against other major currencies, helped by some (rare) good economic data.?

Pound Sterling finally managed to post a positive week, but the underlying situation in the UK remains weak. Cable rallied over 2% to close near the 1.25 level, while EURGBP fell 0.4% to close just above 0.84.

Commodity currencies had a long-awaited, intense week as the greenback retreated. The AUD, NZD and NOK rallied over 2%, while the CAD gained nearly 1%.?Oil moved sharply lower as Trump’s “drill baby drill” motto came into focus.

WTI fell 3.6% to close at $74.53 last week, and we remain firmly in the middle of the main trading range.?

Precious metals certainly liked the Dollar's weakness, and the whole PM complex moved higher last week. Gold rallied 2.5% to close at $2,771, within striking distance of its all-time highs. Silver underperformed yet again, posting a 0.8% gain at $30.59. The Gold/Silver ratio is now above 90, and it’s at extreme levels. This ratio will likely snap back lower, which usually comes with a strong silver rally.

Bonds consolidated their recent gains, and they will likely resume higher. Donald Trump expressed his desire for lower rates and will exert pressure to achieve this. Last week, the 10-year UST yield was unchanged at 4.62%, and the 10-year Bund fell marginally to 131.307 points.?

Equities typically like a weak dollar, so they took this move as another excuse to rally. For now, nothing can stop this bullish momentum, and shorts keep getting squeezed out. Last week, the S&P500 index gained 1.8% to 6102 points, and the DAX rallied 2.4% to close at 21395.?

Finally, crypto-currencies are consolidating their recent gains as the world waits to see how the much-anticipated US Bitcoin reserve will be implemented. The world expects cryptos to continue higher, which obviously carries risks. At the time of writing, Bitcoin and Ethereum are slightly higher at $104,500 and $3,300, respectively.

The Week Ahead:

Next week, the ECB, Bank of Canada, and Federal Reserve will make essential interest rate decisions, but they will likely be overshadowed by Donald Trump’s continued actions and decisions. Volatility should remain elevated, so it’s prudent to trade with less leverage than usual.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell any financial instrument. All market prices, data, and other information are not warranted as complete or accurate?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.

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