Bitcoin is strengthening, the dollar is weakening, and next week’s inflation data could decide whether the risk rally has more room to run.

Overall, it was a strong week across risk assets, supported by weaker labor-market data, a softer U.S. dollar and improving market structure in Bitcoin. At the same time, several important macro risks remain unresolved, particularly inflation, oil prices and the Federal Reserve’s reaction function under Chair Kevin Warsh.

Bitcoin had a constructive week. Price continues to trade around 65,000 and above the 200-week moving average after effectively retesting that level. Depending on the exchange and chart used, last week’s close occurred either marginally above or below the 200-week moving average, but the broader structure remains constructive.

A sustained weekly close above this level would continue to strengthen the bullish short-term case.

From here, I am watching for a potential move toward the Bull Market Support Band at around 69,000. That remains an important technical area and could become the next major test before another correction develops.

Our existing Bitcoin long from range lows remains comfortably in profit.

On the lower time frames, Bitcoin also broke out of its previous channel and successfully retested that breakout structure this week. So far, the move is behaving largely as anticipated.

For now, the short-term structure remains constructive, but this should not be interpreted as confirmation that all downside risk has disappeared. The broader macro environment remains highly data-dependent, and we will continue to manage the position accordingly.

The U.S. Dollar Index is now trading below 100, which has provided an additional tailwind for risk assets.

A weaker dollar generally supports assets such as equities, Bitcoin, commodities and other liquidity-sensitive markets.

As long as the dollar remains under pressure, it provides a more favorable backdrop for risk assets. A reversal higher in the DXY, however, would immediately become something we need to monitor closely.

My long-term view remains the same, I expect a move upwards later this year going into 2027.

Coinbase is currently trading around $153.

We established our position near $140 during the recent weakness, placing the position approximately 10% higher from our initial entry.

The position is developing well so far. Nevertheless, this position is small and we will add more below $140 where we have more price targets.

Gold has also performed well. I initiated the first tranche of my long-term gold position around the $4,000 area, and the position is currently approximately 8% higher.

Gold is now approaching an important resistance area, but this does not materially change my longer-term accumulation thesis. This position was not established as a short-term trade.

If gold were to retrace toward approximately $3,800, I would be interested in adding another tranche. A deeper correction toward approximately $3,300 would represent an even more attractive opportunity to materially increase the position.

The objective remains long-term accumulation rather than attempting to trade every short-term fluctuation.

The most important economic development this week was the weaker-than-expected U.S. employment report.

Nonfarm payrolls declined by 23,000 jobs versus expectations for an increase of approximately 83,000. In addition, May and June payroll figures were revised lower by a combined 103,000 jobs.

This represents a meaningful deterioration in labor-market momentum and strengthens the case for a more accommodative Federal Reserve if the weakness continues. The Fed’s attention is increasingly being pulled away from inflation alone and toward the risk of a broader slowdown in employment.

However, the policy outlook remains complicated.

Inflationary pressures have not disappeared, largely because oil prices remain elevated. Markets are therefore still balancing weaker economic data against the possibility that persistent inflation could force the Federal Reserve to remain restrictive for longer.

Chair Kevin Warsh has also made it clear that if inflation begins surprising meaningfully to the upside again, additional tightening remains possible. Compared with previous Fed leadership, Warsh appears less interested in providing extensive forward guidance and more willing to respond directly to incoming data.

That creates an environment in which markets will likely remain highly sensitive to every major inflation and employment release.

It is also important to remember that financial markets and the underlying economy are not the same thing. A strong stock market does not necessarily mean households are experiencing a strong economy, just as a weakening economy does not automatically translate into falling asset prices. Monetary conditions, liquidity and inflation can create substantial divergence between financial assets and real economic conditions.

Next week will be particularly important from a macro perspective, with CPI due on Wednesday followed by the Producer Price Index.

Prior data showed consumer price inflation easing sharply to 3.5% in June, down from 4.2% in May, while wholesale producer prices declined to 5.5% from 6.0%.

Building on those prior-period pullbacks, markets currently expect CPI to continue its gradual downward trend to approximately 3.4%, while PPI is expected to remain unchanged at an annual rate of 5.5%.

These releases will be especially important because Chair Warsh has made it clear that renewed upside inflation surprises could reopen the door to tighter monetary policy.

The most constructive outcome for markets would therefore be inflation coming in either in line with expectations or below them. A continued decline in CPI would strengthen the argument that inflationary pressures are gradually easing despite elevated energy prices.

Conversely, a hotter-than-expected CPI or PPI report could quickly alter the current market narrative, particularly if it suggests that higher oil prices are beginning to feed back into broader inflation.

With the labor market now showing clearer signs of weakness, the Federal Reserve is increasingly being forced to balance two competing risks: protecting employment while preventing another acceleration in inflation.

That makes next week’s inflation data particularly important.

For now, the market environment remains constructive, but highly dependent on incoming data. Our approach remains unchanged: follow the data, manage risk and adapt as the macro environment evolves.

Economic: no reports
Earnings: Simon Property Group Inc. (SPG), Barrick Mining Corp. (B), Ferguson Enterprises Inc. (FERG), Rocket Lab Corp. (RKLB), AST SpaceMobile Inc. (ASTS), YPF SA (YPF), Axsome Therapeutics Inc. (AXSM), Embraer SA (EMBJ), Apogee Therapeutics Inc. (APGE), AAON Inc. (AAON), AECOM (ACM), Camtek Ltd. (CAMT), California Resources Corp. (CRC)

Economic: Existing Home Sales
Earnings: Sea Ltd. (SE), Lumentum Holdings Inc. (LITE), Cardinal Health Inc. (CAH), Franco Nevada Corp. (FNV), CoreWeave Inc. (CRWV), Elbit Systems Ltd. (ESLT), Venture Global Inc. (VG), Super Micro Computer Inc. (SMCI), Aramark (ARMK), Quantinuum Inc. (QNT), On Holding (ONON), CAVA Group Inc. (CAVA), Hims and Hers Health Inc. (HIMS), Middleby Corp. (MIDD)

Economic: Consumer Price Index CPI expected 3.4% YoY, previous 3.5% in June, down from 4.2% in May, EIA Crude Oil Inventories, MBA Mortgage Applications Index, Treasury Budget
Earnings: Cisco Systems Inc. (CSCO), Nebius Group (NBIS), Coherent Corp. (COHR), Amcor PLC (AMCR), Pan American Silver Corp. (PAAS), Performance Food Group (PFGC), Korea Electric Power Corp. (KEP), Cerebras Systems (CBRS), CAE Inc. (CAE), Navan Inc. (NAVN), Brinker International Inc. (EAT), EnerSys (ENS)

Economic: Producer Price Index PPI expected 5.5% YoY, previous 5.5% in June, down from 6.0% in May, Continuing Claims, EIA Natural Gas Inventories, Initial Claims
Earnings: Applied Materials Inc. (AMAT), Brookfield Corp. (BN), Nu Holdings (NU), JD.com Inc. (JD), Credicorp (BAP), Tapestry Inc. (TPR), Ascendis Pharma (ASND), QXO Inc. (QXO), Applied Industrial Technologies Inc. (AIT), Dillards Inc. (DDS), X-Energy Inc. (XE), DLocal Ltd. (DLO), StoneCo Ltd. (STNE), Celcuity Inc. (CELC)

Economic: Business Inventories, University of Michigan Consumer Sentiment
Earnings: RLX Technology (RLX), Hemab Therapeutics Holdings (COAG), ArriVent BioPharma Inc. (AVBP), Avalyn Pharma (AVLN), Anteris Technologies Global Corp. (AVR), United States Antimony Corp. (UAMY), ASP Isotopes Inc. (ASPI)

Everything you just read is what we do every single day at Sonderberg Research. The difference is timing and depth.

By the time analysis like this reaches a newsletter, the move has often already started. My private clients don't wait. They get:

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Kind regards,
Diego Sonderberg

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