Core Viewpoint - Wall Street experienced a significant decline due to an oil shock and escalating war risks in the Middle East, prompting investors to quickly adjust their inflation and growth expectations [1] Oil Market - WTI crude oil prices surged over 36% for the week, marking the largest weekly gain since futures trading began in 1983, briefly exceeding USD 92.60, while Brent crude reached over USD 94.50 [2] - The disruption in the Strait of Hormuz has shifted the market narrative from "tight supply" to an "availability crisis," as tanker owners are hesitant to navigate the area due to missile and drone threats [2] Treasury Yields - Treasury yields saw a sharp increase, with the 10-year yield rising approximately 4.6%, the 2-year yield up 5%, and the 30-year yield increasing by 3.2%, reflecting adjustments to higher inflation expectations [3] Currency Movements - The US Dollar Index (DXY) increased but could not maintain levels above the January high of 99.4, benefiting oil-exporting currencies, particularly the Canadian dollar, which appreciated nearly 2% against the Euro in one week [4] Economic Indicators - The upcoming week will focus on whether the oil-driven inflation shock will lead the Federal Reserve to adopt a more cautious approach to rate cuts, especially in light of recent labor market data showing a surprising decline in nonfarm payrolls by 92,000 against an expected gain of 60,000 [3][7] - The February CPI report is anticipated, with expectations for both headline and core inflation to be around 2.5% year-over-year; any upside surprise could validate the recent rise in yields [8] - The core PCE report on Friday, along with January income and spending data, will provide further insights into inflation momentum and consumer resilience, influencing market narratives regarding interest rates [9] Market Outlook - Until there is clarity on de-escalation in the Gulf region or evidence of controlling inflation without hindering growth, the market is expected to favor stronger energy prices, firmer yields, and a stronger dollar, while valuations in industrials and energy-sensitive assets may remain fragile [11]

Core Viewpoint - The US Dollar Index increased despite a 25-basis-point rate cut, indicating that the cut was anticipated prior to the decision, while Chair Powell's comments shifted the policy outlook to a more data-dependent approach [1] Currency Movements - DXY approached a significant resistance level, with EUR/USD and GBP/USD declining towards recent lows; USD/JPY gained further as the BoJ did not indicate imminent rate hikes [2] - Commodity currencies showed mixed performance, with CAD benefiting from stronger crude prices and a resilient US risk tone, while AUD and NZD lagged due to cautious sentiment in Asia [2] Market Signals - Cross-asset signals supported the dollar's strength, with US equities achieving a third consecutive weekly gain and closing a sixth positive month, driven by strong performances from major companies like Alphabet and Amazon [3] - The trade war climate improved following President Trump's trip to Asia and a truce on rare earths/minerals with President Xi [3] Currency Pairs Analysis - EUR/AUD is forming a broadening megaphone pattern, potentially indicating a long-term top, with a recent lower high and a retest of previous lows; a break below 1.75600 could signal sustained weakness [4][6] - AUD/SGD has rebounded from 0.83420 support and is testing previous resistance at 0.55520; a breakout could lead to a medium-term rally towards 0.87260 [7][9] Economic Indicators and Outlook - The ongoing government shutdown affects near-term economic indicators, with focus on ISM surveys, FED speeches, and ADP data; Powell's comments on a December cut suggest that a strong ISM report could bolster dollar strength and pressure EUR/USD towards October lows [10] - Upcoming economic events include US ISM manufacturing and services, ADP data, CHF CPI, and central bank meetings for RBA and BoE, with traders closely monitoring AUD and GBP for potential volatility [11]