This week's key economic releases gave traders and investors plenty to digest, reshaping sentiment across global financial markets. The primary driver of asset price movements was weak US labor market statistics, which triggered a chain reaction ranging from a decline in the US dollar to historic highs in precious metals and European equities.
Let's take a closer look at the key events and economic indicators that shaped the markets over the past few days.
RBA Meeting Minutes. Major banks (CBA, ANZ) noted an unexpectedly hawkish tone from the regulator. The central bank is concerned about excess demand and capacity constraints, which increase the risk of another rate hike in the future.
S&P Global Composite PMI (June). It got revised upward to 50.4 (compared to the preliminary estimate of 49.8). The services sector returned to growth (50.5 vs. 48.7), while the manufacturing sector accelerated to 51.5. On this backdrop, the Australian dollar strengthened to 0.694 USD.
Kevin Warsh’s Speech in Sintra. The new Fed Chairman emphasized a decline in inflation expectations but maintained his hawkish rhetoric, refusing to rule out a rate hike in July. Analysts believe the hawkish tone is an attempt to make the markets do the Federal Reserve's work for it, even though the latest economic data points to a cooling economy.
ADP Employment Report. Private-sector job growth published on Wednesday fell short of expectations, setting the stage for Friday's dollar decline.
US-Iran Negotiations. Talks in Doha, mediated by Qatar and Pakistan, showed significant progress. Commercial shipping through the Strait of Hormuz began an active recovery. Saudi Arabia's oil exports returned to 90% of pre-conflict levels, while the UAE restored its volumes using a bypass pipeline.
Non-Farm Payrolls released at 12:30 p.m. GMT (June). The actual figure came in at 57K, critically lower than the forecast (110K), marking the lowest reading in four months.
Unemployment Rate published at 12:30 p.m. GMT (June). The metric stood at 4.2%.
Market reaction: The probability of a Fed rate hike in September instantly collapsed from 67% to 50%. The US Dollar Index (DXY) dropped sharply below the 101 mark, snapping a two-week winning streak.
Gold ($XAU/USD$). On the back of the falling dollar and sliding US Treasury yields, spot gold skyrocketed to a historic milestone of $4 200 per ounce. The metal received additional support from declining oil prices.
Silver ($XAG/USD$). Consolidated above $61 per ounce, sustaining its powerful rally.
Brent Crude Oil. Oil held steady within the $69–$72 per barrel range, fully returning to the price levels observed before the escalation of the Middle East conflict in late February.
STOXX 50 and STOXX 600 Indices. These indices went up by 0.5% on Friday to hit fresh all-time highs. Over the week, the STOXX 50 gained 2.3%, and the STOXX 600 added 1.9%, marking their best weekly performance in a month. The growth was supported by strong services PMIs in China and Spain. Technology and industrial stocks outperformed, with Siemens (+1.8%), ASML (+1.9%), and Airbus (+1.9%) posting solid gains, while luxury stocks came under pressure, led by L'Oréal (-2.0%) and Kering (-1.9%).
Japanese Yen (JPY). The Japanese currency strengthened to 161 per dollar, gaining roughly 1%. Finance Minister Satsuki Katayama confirmed readiness to intervene at any moment, especially during low-liquidity conditions over the US weekend. The market is buzzing with rumors that Japan might stop issuing warnings for currency interventions.
New Zealand Dollar (NZD). The NZD rose to 0.572 USD, gaining 1% over the week. Market expectations for an RBNZ rate hike next week jumped to 78%, driven by improving June business activity and rising consumer confidence (the ANZ-Roy Morgan index rose 4 points to 91.3).
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