The global economy is difficult to predict. Major events happening worldwide play a vital role in shaping the economy. In our weekly overview, we discuss these key drivers and price movements that can help you form the right expectations for the future of foreign exchange, stocks, cryptocurrencies, and commodities markets.
Forex Weekly Overview
The euro fell across the board on Thursday after weak purchasing managers’ index (PMI) data from Germany and France confirmed the eurozone economy was struggling to regain momentum, prompting traders to scale back aggressive bets on a rate hike by the European Central Bank.
Germany’s economy, Europe’s largest, lost momentum sharply at the end of the second quarter, pressured by falling exports, as economic uncertainty and inflation weighed on domestic demand, preliminary surveys showed on Thursday.
France’s flash memory manufacturing purchasing managers’ index fell to 51.0 in June from 54.6 in May, well below expectations for a slight drop to 54.0.
The euro’s decline lifted the dollar off previous lows and pushed the greenback higher against other currencies after dovish comments from Federal Reserve Chairman Jerome Powell on Wednesday weighed on sentiment and pushed down U.S. Treasury yields.
Stocks Weekly Overview
U.S. stocks were lower on Friday, but little changed, with none of the three major moving averages moving more than 0.2%.
At Wednesday’s close, the S&P 500 lost 0.13% to 3,579.89, while the Dow and Nasdaq lost 0.15% to 30,483.13 and 11,053.08, respectively.
All three indexes were down more than 1% at the open, initially suggesting we would pare back Wednesday after all three major indexes rose more than 2% earlier in the trading week. Last week, the S&P 500 lost about 5.8%, its most significant drop since March 2020.
However, on Friday, crude oil prices were under pressure, falling 3.7% to $105.50. Crude oil prices have fallen more than 10% over the past five days from over $118 a barrel last Thursday. Energy stocks tracked by the S&P SPDR ETF XLE have fallen nearly 20% since June 8.
Crypto Weekly Overview
Bitcoin is trading near the $20,000 mark again, underperforming stocks amid ongoing fears of a significant shakeout in the crypto market.
The largest cryptocurrency fell 4.8 percent to $19,832 before closing at around $20,000 at 3:11 p.m. in New York. Ether fell as much as 6.1% to $1,053. Solana, Cardano, Polkadot, and Dogecoin all fell.
“Bitcoin has ‘bottomed’ but may not have ‘bottomed’ yet,” said Mark Newton, head of technical strategy at Fundstrat Global Advisors. “Upside targets should be upside before prices retreat to potentially challenging lows in the last week of June. It was realized near $23,300, and the highest price was near $24,800.”
Cryptocurrencies have moved in the same direction as the stock market for months as investors’ appetite for risk assets waned amid growing fears of an economic slowdown. Bitcoin appears to be consolidating around $20,000, just as it did about $30,000 for most of May and June.
Commodities Weekly Overview
Oil prices fell about 3 percent on Wednesday as investors worried that a Fed rate hike could push the U.S. economy into recession and dampen fuel demand.
Brent crude futures fell $2.91, or 2.5%, to $111.74 a barrel. The global benchmark hit an intraday low of $107.03, its lowest since May 19.
U.S. West Texas Intermediate (WTI) crude fell $3.33, or 3 percent, to $106.19 a barrel. The session low was $101.53, the lowest since May 11.
Investors on Wednesday assessed how raising interest rates to cool rising inflation could hamper the economic recovery.
However, oil pared losses during the meeting, the pace of which depended on the economic outlook, after Federal Reserve Chairman Jerome Powell pledged an “overarching focus” on reducing inflation and reiterated that it was appropriate for the central bank to continue raising interest rates.
U.S. refining capacity fell for the second straight year in 2021, government data showed, as plant shutdowns continued to hurt its ability to produce gasoline and diesel.
U.S. crude and gasoline inventories likely fell last week. Weekly oil data is delayed due to Monday’s bank holiday, with industry data due at 4:30 pm on Wednesday. (GMT 2030) and government data are scheduled for release at 11 am on Thursday.
The $2.4 trillion to be invested in global energy this year includes record spending on renewables but not enough to fill supply gaps and fight climate change, the International Energy Agency said.