An inkling of a slowdown in the US economy was justification enough to lift stock indices to record highs last week as the Dollar finally succumbed to the prospect of lower interest rates. For once, inflation figures adhered to predictions and markets were all too keen to seize their moment. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all set new all-time highs last week, as did the FTSE100 and a number of European stock indices.
As markets tried to gauge the likelihood and timing of a future rate cut, pressures on the Dollar sent the DXY to within touching distance of the 104 level on Thursday. The weakness in the greenback no doubt contributed significantly to the buying pressure in precious metals. Gold once again set a new record high last week, touting $2,414 as its new peak, but ultimately silver shined the brightest, climbing 6.5% straight to $31.50 an ounce by Friday’s close, a price not seen for over a decade.
Looking forward to the week ahead, traders may need to be wary of low liquidity in the markets today as Canada and most of Europe close for Pentecost. We will have to wait until Thursday to get to any substantive data releases, including manufacturing and services PMI out of Australia, Europe, the UK and the US, as well as jobless claims in the latter. Wednesday offers us a midweek treat in the form of FOMC minutes, to which currency traders will understandably devote their full attention.
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