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While the U.S. dollar strongly rebounded against some majors like the Japanese yen (JPY) with the USD/JPY pair trading by Monday morning not far from the recent high and other majors like the GBP and EUR also trading relatively weaker compared to the greenback, among emerging market currencies the sentiment was a bit mixed. The USD/TRY and USD/INR pairs remained fairly stable as was the USD/ZAR, while the USD/MXN closed even slightly lower.
Cryptocurrencies traded at new 1-1/2 lows this weekend with Bitcoin trading on Saturday at times below the $18k mark, while Ethereum even dropped below $900 only to recover later on above $20k and $1,100 respectively by Sunday night. At the peak of the sell-off the total crypto market cap fell below $850 billion, while is less than Bitcoin’s market cap at its relatively recent peak around half a year ago.
Sentiment in the equity markets was overall moderately positive with U.S. and European market indices like the US 500 and Germany 40 trading slightly higher compared to the closing level on Friday, while the China A50 index reached a new high since early March. At the same time the Japan 225 (Yen) index traded lower and the Korea 200 index was at times down by around two per cent, reaching a new low since November 2020.
Due to a holiday in the U.S. on Monday relatively few fundamental data releases are scheduled for today.
While the strong dollar put some pressure on the EUR/USD pair, at the end of the week the rate still stood around the 1.05-mark. The recent announcement by the ECB to work towards cohesive market conditions around the eurozone for now seems to be working with the 10-year yield on Italian and Spanish bonds remaining well below the 4% and 3% marks respectively.
The German producer price index (PPI) for May was revised slightly higher on an annual basis from 33.5% to 33.6%.
The rise in gold prices on Friday was not sufficient to fully offset the steep losses at the beginning of the previous week and so gold had its worst weekly performance in six weeks. Silver was also trading lower and closed for the third week in a row in the red, though only with a very moderate downside at that. Platinum and palladium prices also closed lower on Friday.
Commitment of traders (COT) data published by the U.S. CFTC on Friday showed that net speculative positions in both silver and gold futures declined on a weekly basis with the net positions in gold futures reaching a new year-to-date low.
Oil prices had on Friday their biggest daily drop in four weeks and continued moving to the downside by Monday morning with a barrel of WTI crude oil at times traded even below $108.
The U.S. Baker Hughes Oil Rig Count improved for the second week in a row and at 584 rigs in operation is at a new high since March 2020.
Due to a holiday in the U.S. on Monday, the release of the weekly oil inventory data will be one day later than usual with the American Petroleum Institute (API) publishing its weekly statistical bulletin on Wednesday and the Energy Information Administration (EIA) releasing its weekly data on crude oil, gasoline and distillate stockpiles on Wednesday.
Major stock market indices were not making significant moves on Friday with the US 500 almost unchanged, while the US Tech 100 managed to end the day with a moderate upside. Over the past 11 weeks only one week the US 500 index closed higher and it remains unclear if the bottom of the bear market was already reached or if the sell-off should continue.
Fundamentals published on Friday such as industrial production and capacity utilisation were both weaker compared to expectations with industrial production improving in May only by 0.2% while capacity utilisation remained unchanged at 79%.
Norwegian Cruise Line (+10.33%) and Carnival (+9.84%) were among the best-performing stocks in the S&P 500 index on Friday, recovering practically all the losses from the session on Thursday when both stocks were among the worst performers.
As oil prices dropped energy sector stocks (US Energy ETF -5.50%) came again under pressure with the ETF down by more than 17% since the beginning of the past week and oil companies like ConocoPhillips (-8.44%) among the worst performing equities on Friday.
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