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Daily Market Commentary 20th May 2024

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Markets consolidated Friday, trading around record highs, following almost two weeks of gains. The improved market sentiment is derived from the confidence in Central Bank interest rate cuts, following soft inflation data in both the US and Europe. The ECB is expected to cut rates as soon as this month, perhaps, and the Fed is expected to begin easing rates in Q3. This has boosted market sentiment and seen bond yields and the US Dollar tumble. The EUR has zoomed up to 1.0850, while the GBP has jumped to 1.2700. The coming week will be dominated with growth and inflation numbers, while the Fed release the latest minutes, from their last meeting. PMI data from Asia, Europe and the US will provide interest to market participants.

The softer reserve has allowed the recovery in commodity currencies to continue. The AUD is fast approaching 0.6700, while the NZD consolidates above 0.6100, ahead of the RBNZ latest rate decision this coming week. The RBNZ is likely to leave rates at elevated levels, to combat persistent inflation in the local economy, while accompanying commentary will be important.

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