Oil prices were down for the week and major cryptocurrencies finally saw a rally after two weeks of slow movements.
Forex
Source: Bloomberg.
The EUR/USD pair ended the week with minor gains with the euro at 1.0694 USD by the week’s close. There were many factors that kept the dollar in check — geopolitical tensions between the US and China as the latter’s intention to supply Russia with weapons for the ongoing war in Ukraine, hawkish comments from the European Central Bank (ECB), similar remarks from US Federal Reserve officials, and a smaller-than-expected decline in inflation.
Meanwhile, the GBP/USD pair had a relatively flat performance, with the GBP ending the week marginally low at 1.2043 USD. Further, at a rate of 134.13 per USD, the Japanese yen experienced a 0.13% decline over the week against the greenback.
This week will see 4 trading days as the US financial markets will be closed on Monday, 20 February, on account of the Presidents’ Day holiday. The remainder of the week is packed with scheduled high-impact economic data releases.
The US Federal Open Market Committee (FOMC) meeting minutes will be released on Wednesday, 22 February. The fourth quarter gross domestic product (GDP) and the jobless claims data in the US will be released on Thursday, 23 February, while the Personal Consumption Expenditure (PCE) — which measures the fluctuations in the cost of commodities and amenities acquired by individuals — will be released a day later on Friday, 24 February.
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Commodities
Source: Bloomberg.
Gold prices continued to be sluggish, closing the week at 1,842.57 USD. The instability in the yellow metal’s prices has largely been influenced by US-related factors, notably the Federal Reserve’s aggressive stance in response to robust economic data such as non-farm payrolls, inflation, and retail sales.
There’s a large amount of important economic data due for release this week, especially with the PCE data — the Fed’s preferred inflation barometer — due on Thursday, 23 February. If the PCE numbers follow in the footsteps of the inflation data from last week, it could give a boost to the dollar and expose gold to further bearish pressure.
Meanwhile, oil prices ended the week lower as traders worried about the US Fed’s interest rate decision after two officials on Thursday, 16 February, warned of additional rate hikes in a bid to curb inflation. Signs of ample supply — increase in crude inventories in the US and expectations of Russian suppliers maintaining their current output — also played a role in keeping prices in check last week. Oil settled at 2 USD a barrel on Friday, 17 February.
Cryptocurrencies
Source: Bloomberg.
After a subdued fortnight, major cryptocurrencies saw a rally last week that pushed the total market capitalisation of digital assets up to 1.17 trillion USD on Sunday, 19 February.
Bitcoin, the world’s most popular cryptocurrency, climbed 14% for the week and crossed the 24,000 USD mark for the first time since August 2022. It peaked as high as 24,650 USD on Saturday, February 18. Bitcoin has come a long way since last November when it sank below 16,000 USD. Ethereum, the world’s second-largest cryptocurrency, nearly touched the 1,700 USD mark, reaching a high of 1,695.82 USD on Friday, 17 February.
Meanwhile, in a development that could see regulation in the decentralised cryptocurrency space, the Group of 20s — or G20 — Financial Stability Board (FSB) on Thursday, 16 February, said that it would take steps to tackle vulnerabilities in decentralised finance (DeFi) following the November 2022 collapse of Future Exchange — the cryptocurrency exchange platform also known as FTX.
Two weeks after China distributed millions of dollars worth of its Central Bank Digital Currency (CBDC) across the country, Japan announced on Friday, 17 February, plans to test run its own CBDC pilot programme with digital yen, beginning April 2023. Central banks across the world are at various stages of their own CBDC development as they seek to enter the electronic currency space with digital versions of their legal tenders.
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US stocks
| Name of the index | Friday’s close | *Net change | *Net change (%) |
| Dow Jones Industrial Avg (Wall Street 30) | 33,826.69 | -42.58 | -0.13 |
| Nasdaq (US Tech 100) | 12,358.18 | 53.26 | 0.43 |
| S&P 500 (US 500) | 4,079.09 | -11.37 | -0.28 |
*Net change and net change (%) are based on the weekly closing price change from Friday to Friday.
The major US stock indices continued their moderate performance last week, starting the week strongly before their gains faded out by the end of it. The S&P 500 slipped 0.28%, the Dow Jones was down 0.13%, while the Nasdaq gained a measly 0.43%.
There was good news on the data front as January retail sales in the United States increased by 3% on a seasonally adjusted basis, marking the largest monthly rise in almost two years.
Meanwhile, the fourth-quarter earnings continued their below par performance thus far, with nearly four-fifths of the S&P 500 firms having announced their results. Based on the numbers released until now and forecasts for the remainder of the earnings season, analysts expect a 4.7% decline compared to the same quarter last year.
Investor focus will be on the release of the minutes from the US Federal Reserve’s meeting when it announced a 25 basis point rate hike. It will be released on Wednesday, 22 February. Meanwhile, a number of big retailers are due to announce their earnings in the coming days with the results of Walmart and Home Depot due this week.
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