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Daily Market Commentary 25th March 2021

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US Treasury Secretary Yellen and Federal Reserve Chairman Powell, appeared in front of the Senate Banking Committee overnight, following the joint appearance in front of House the previous day. There were no major revelations and the Fed Chair continued to predict stellar economic growth for the US economy over 2021. The expectation of a ‘very, very strong year’, with the usual pandemic caveat, allowed markets to rally. US equites regained lost ground, while the 10 year bond stabilised and the US Dollar continued to gain ground.

The EUR fell back to 1.1820, while the GBP plunged to 1.3700, followed weaker than expected CPI data. European PMI data came in better than expected, with surging Manufacturing data, overwhelming the insipid lock-down driven Services numbers. This is likely to get worse, before it gets better, as European leaders continue to reject protocol and combat the third wave of the virus with lock-downs. Europe has had a very poor roll-out of the vaccine, which will inhibit the strong economic rebound, experienced in the UK and USA.

The collapse in the NZD stabilised overnight, after reaching lows just above 0.6950, while the AUD regained 0.7600. Both have suffered at the hands of a resilient reserve currency, but local housing and tax policy in NZ has not been well received by markets. Analysts monitor the Fed Chairman’s testimony closely and will look for strong GDP growth data, supporting the bullish sentiment from authorities.

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