Last week, the July CPI (Consumer Price Index) and the PPI (Producer Price Index) results were released, and readings were lower than expected. Markets welcomed these core readings positively.
Forex
Source: Bloomberg. Click to see full size.
Euro
The euro had a terrific week versus the US dollar, climbing from $1.017 to a weekly high of around $1.037 before settling at around $1.030. The gain was spurred by a weaker dollar that resulted from worse US CPI statistics, forcing investors to reduce their rate hike estimates, from 75 to 50 basis points, for the Fed’s September meeting. However, market euphoria was swiftly muted as Federal Reserve officials highlighted that price pressures remained intense, necessitating additional rate hikes.
GBP
The GBP/USD exchange rate rebounded after softer-than-expected CPI figures. Inflation in the world’s largest economy eased more than expected throughout the period, causing the dollar index to plunge in tandem with the yields. Inflation in the US CPI dropped from 9.1% to 8.5% YoY. However, the hawkish Fed commentary renewed US-China trade tensions, and China’s Covid lockdown concerns capped GBP/USD’s upward movement.
This week’s focus will be on the release of the FOMC minutes, while the UK Retail Sales will also be released to highlight consumer spending.
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Commodities
Source: Bloomberg. Click to see full size.
Gold
Gold ended its week at around $1,800.
The yellow metal soared to its fourth successive week of upswings with gains of 1.37%. There was a significant impact on the gold market last week due to the lower-than-expected US CPI and PPI which indicated slowed inflation, and the decline in the value of the US dollar.
This week, gold investors will have their eyes on the FOMC minutes and US retail sales data, which will provide insight into the US economy.
Oil
Meanwhile, WTI and Brent crude had gained 3.5% and 3.4%, respectively. Among the factors affecting the oil market were a reduction in US gasoline supplies, a decline in the US dollar index, and an increase in the International Energy Agency’s forecast for global crude oil demand.
Cryptocurrencies
Source: Bloomberg. Click to see full size.
Last week, most of the leading cryptocurrencies experienced double-digit weekly percentage gains despite the cryptocurrency market being bearish. The coins experienced a minor drop mid-week and managed to recover without any significant movement towards the end of the week.
Bitcoin
Bitcoin started the week above the $23,000 level. However, as markets awaited the latest Consumer Price Index (CPI) reading, a bullish momentum had gained traction during mid-week, resulting in a risk-off mood among traders. Bitcoin had surpassed the $24,000 level.
The cryptocurrency closed the week with a $24,330 price, making it the third attempt to take the $24,000-ish level. As seen in the chart above, Bitcoin’s SMA 10 at $24,411.64 was leading its SMA 5 at $24,293.57.
Ethereum
Similarly, Ethereum followed an upward trend as the price has risen by 10.73% since last week, mostly due to the upcoming Ethereum Merge, which is scheduled to launch on 19 September. Ethereum showed a bullish trend over the week, finishing at $1,936.80.
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US stock markets
|
Name of the index |
Friday’s close |
*Net change |
*Net change (%) |
|
Dow Jones Industrial Avg (Wall Street 30) |
33,761.05 |
957.58 |
2.92% |
|
Nasdaq (US Tech 100) |
13,565.87 |
358.18 |
2.71% |
|
S&P 500 (US 500) |
4,280.15 |
134.96 |
3.26% |
Source: Bloomberg
*Net change and net change (%) are based on the weekly closing price change from Friday to Friday.
With the Dow Jones up 2.92%, the S&P 500 up 3.26%, and the Nasdaq up 2.71%, the US stock market ended the week in the green. Both the Nasdaq and S&P 500 recorded their fourth consecutive positive week. Nasdaq was up over 20% from mid-June lows, indicating it has officially entered the bull market.
The indices have been driven upwards by positive inflation news. From June to July, the consumer price index remained flat, indicating that consumer prices didn’t increase. It was mainly due to lower gas prices. It’s still up 8.5% year over year, but it’s less than experts expected. The decline in producer prices was a surprise, as well as the unexpected drop in import prices.
Investors celebrated signs that inflation may be peaking with the lower-than-expected headlines and core readings, which are hopeful signs that the Fed’s rate hikes are starting to take effect.
Next week, Walmart and Home Depot will release their earnings reports, and the Federal Reserve will release its July meeting minutes, which will provide additional insight into policymakers’ decisions.
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