Daily Market Commentary 25th November 2021

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US markets were negative overnight, but trading was light, ahead of the long Thanksgiving weekend. US GDP Q3, was in line with expectations, but suffering a big fall from the 6.7% in Q2, coming in at 2.1%. Durable Goods Orders contracted, while the Fed’s favoured measure of inflation, PCE, confirms massively surging prices. The PCE came in at 5%, continuing to climb north, at an alarming rate. Inflation has put the pressure on the Fed to cut QE and begin to raise rates and is growing by the day. US Bond Yields have surged, pushing above 1.66% in the 10 year, supporting a stronger US Dollar. The EUR crashed below 1.1200, while the GBP fell to 1.3320, amidst a European economy threatened by surging virus levels.

The RBNZ raised interest rates by 0.25%, in a relatively dovish statement, which avoided the temptation to raise rates by 50 basis points, as many had speculated. The Bank has cited the high levels of consumer debt and the threat of further disruptive restrictions surrounding virus challenges. The Central Bank’s reticence was enough to send the NZ Dollar south, crashing to 0.6850, aggravated also by the strong reserve. The AUD also suffered the rising reserve and dipped below 0.7200. Market will remain quiet over the US long weekend

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