The ‘Bear Market Rally’ continues in US equities, while the US Dollar also gains ground. US share markets continue to trade strongly, banking on recent stronger than expected jobs data and assumptions that inflation has peaked. US economic data does not indicate that such confidence is warranted. The Empire State Manufacturing Index collapsed to negative 31.1, which is a massive contraction in the manufacturing sector, while the leading sector of housing is markedly negative. The latest NAHB House Market Index fell to below 50, which shows very negative sentiment amongst builders and a recent low.
The US Dollar continued to rebound, with the EUR falling back to 1.0150, while the GBP dropped to 1.2050. The US Dollar rally could be more of a safety play. Commodity currencies also suffered a stronger reserve currency, with the AUD crashing to back to 0.7000, while the NZD retreated to 0.6350. NZ Services PSI was lower, confirming a slowdown, but remains positive above 50.
Local Markets will await the RBA minutes release, to gauge the thoughts of the Australian Central Bankers, ahead of tomorrows RBNZ rate decision.