This past week showcased a rollercoaster of economic revelations and market responses. Despite a mix of apprehensions, especially surrounding inflation and monetary policies, the prevailing mood remained decidedly risk-on. That culminated in DOW and S&P 500 reaching unprecedented highs, even though both concluded the week on a relatively subdued note. Inflation data stood at the heart of market speculation, particularly in the US, where stronger-than-anticipated consumer and producer price indices prompted traders to reassess the likelihood of an early Fed rate cut. Expectations for a rate reduction in the first half were dampened. Yet, confidence in the underlying strength of the US economy served as a counterbalance, maintaining an optimistic outlook among investors. European markets echoed this positive investor sentiment, with DAX and CAC setting new records. ECB is seen as having more flexibility in initiating earlier policy easing, due to comparatively lower inflationary pressures in Eurozone. Meanwhile, Nikkei's ascent was underpinned by reassurances of prolonged accommodative monetary policy in Japan, and the softened verbal intervention by officials on Yen's depreciation. In the currency arena, Dollar maintained its dominance throughout most of the week, until Australian Dollar edged ahead, lifted by the global risk-on wave. Euro emerged as the third strongest performer. Conversely, Swiss Franc and the Yen found themselves at the bottom, affected additionally US yields' extended rebound. British Pound presented a mixed picture, buffeted by a slew of confusing economic indicators from wage growth to recession signals and retail sales spikes. Meanwhile, Canadian Dollar's failed to carve a clear path and ended mixed too. |
