Daily Market Commentary 24th November 2021

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European markets continued to suffer, as the fourth and fifth waves of the virus overwhelm and Governments look to impose further restrictions. This comes despite some strong flash PMI data, which would ordinarily boost market sentiment, but the rising risk of lockdowns prevailed on markets. The rising virus infections and inflationary pressures have lead to upward pressure on US Bond Yields and thus the US Dollar, with the EUR trading 1.1250, while the GBP drifted to 1.3370.

Australian PMI data was also stronger than expected, as the economy re-opens, following there severe lockdowns. The RBNZ meets today to announce a probable interest rate hike, recognising the inflationary pressures in the economy. Q3 NZ Retail Sales shocked local markets, with a contraction of 8.1% for the quarter and 5.2 on an annualised basis. The consumer is being devastated by the economic climate, rising interest rates and suffering from the extended lockdowns. These destructive lockdowns and restrictions have seen 26,774 businesses closed in eight months! The rise in interest rates may support a short-term boost to the local currency, although the surging reserve has crushed commodity currencies of late. The NZD has crashed to 0.6920, while the AUD may soon test 0.7200, on the downside.

All local eyes remain on the RBNZ today, in a shortened trading week in the US, due to Thanksgiving Holidays.

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