Daily Market Commentary 28th May 2021

US equity markets turned positive overnight, as fears over the previous shocking Non Farm Payrolls number, were partially allayed. The terrible Non Farm Payrolls numbers for last month shocked the market narrative that the economy was recovering strongly, but the Weekly Jobless Claims number came in at 406,000, lower than expected. Durable Goods Orders contracted 1.3%, while Q1 GDP was estimated at 6.4%, in line with expectations. The strong economic recovery and the massive fiscal and monetary stimulus has been the economic reality, but inflation and conflicting jobs reports, have rattled expectations. Pending Home Sales contracted 4.4% for April, although the annual rate remains a staggering 51.7% increase, but the trend remains worrying.

The EUR stabilised around 1.2200, following the dovish ECB commentary, while the GBP jumped to 1.4210. The strength of the GBP was supported by the Bank of England, which outlined their own plans to increase interest rates in 2022, following/co-ordinating with the RBNZ? Commodity currencies were also steady, with the AUD trading 0.7740, while the NZD looks to test 0.7300 once again.

Inflation and growth remain the key drivers to the currency markets.