The U.S. Dollar Index has been volatile this week, initially supported by persistent inflation, but fell sharply after Trump said he might sign an agreement with Iran over the weekend. The index repeatedly tested and failed to hold the 100-point mark during the week and is expected to close lower.
Spot gold has generally weakened this week, falling to a six-month low and entering a bear market for the first time in four years, before recovering near $4,200 per ounce; it is likely to post its fifth consecutive weekly decline.Gold prices were initially weighed down by U.S. inflation and rate hike expectations, but rebounded after Trump called off a strike against Iran and concerns over energy inflation eased.
International crude oil prices fell significantly this week, with both WTI and Brent hitting roughly two-month lows.Trump’s cancellation of the strike on Iran and the prospect of a potential peace agreement quickly squeezed out the risk premium associated with the Strait of Hormuz. As energy inflation trades cooled, market sentiment shifted from supply panic to risk aversion.
Non-USD currencies showed mixed but generally stronger performance this week, with the overall recovery of non-USD currencies driven by the dollar’s pullback.The euro was boosted by the European Central Bank’s first rate hike in three years, briefly rising to near 1.159; the pound awaits guidance from the Bank of England and economic data; the yen remains hovering around the 160 level as concerns over dry weather intensify; the Australian dollar is affected by fluctuations in risk appetite.
The U.S. stock market experienced a dip followed by a rally this week, with the main theme shifting from concerns over an AI bubble to risk recovery following the de-escalation in the Middle East. Chip stocks rebounded, while energy stocks came under pressure from falling oil prices, and financial stocks strengthened as risk appetite improved.Oracle plummeted by about 12% at one point due to AI capital expenditure and debt pressures, while SpaceX’s record-breaking IPO bolstered sentiment toward tech risk assets, with the opening indicative price on its first trading day rising 29% above the IPO price.