Daily Market Commentary 26th May 2021

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European markets were boosted by German GDP numbers, showing a less than expected contraction of 3.1% for the year, while business confidence showed signs of improvement. The German and European economies and societies are re-opening, so that should deliver more positive results, assuming the vaccination roll-out is effective. The US markets turned negative, still shaken by the fears of inflation and the Fed’s ‘tapering’ program. The S&P Case-Shiller Home Price Index returned to positive, while New Home Sales fell 5.9%, giving worrying conflicting data in the important leading sector. The EUR regained 1.2250, supported by economic data, while the GBP drifted to 1.4140.

Commodity currencies were stable ahead of the RBNZ interest rate decision. The RBNZ is expected to follow global Central Banks and recognise recent inflationary pressures as transitional, although bullish ‘tapering style’ speech could trigger markets. The NZD trades 0.7225, ahead of key trade data and RBNZ releases, while the AUD holds around 0.7750.

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