Daily Market Commentary 11th May 2024

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Equity markets closed out yet another strong week of gains, especially European bourses, which broke into record territory. The fuel for the rally was the speculation that the ECB and Bank of England will follow the Swedish Riksbank and cut rates sooner rather than later. Confirmation will come and reinforcement for the argument will come in the form of inflation data, which will be released in the coming week. The UK emerged out of the 2023 recession, with a better-than-expected GDP (0.6%) number for Q1. The only negative to the rally was that bond yields are creeping back up in both the US and Europe. The EUR settled above 1.0750, while the GBP consolidated above 1.2500, following the stronger than expected GDP growth data.

The settled reserve allowed the NZD to regain 0.6000, while the AUD attempt to push above 0.6600. Australian Employment data will be released in the coming week and the RBA will be looking for a softer number, to contain inflationary fears. The Commodity currencies will be determined by the European and US inflation and growth data.

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