Daily Market Commentary 29th January 2021

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US equities came roaring back overnight, after the steep losses experienced in the previous days trade, supported by the Fed and the respectable GDP growth number. US equities have experienced a rush of volatility, with media focus on retail traders, highly leveraged attacks on low market cap shares, at the expense of hedge funds. This is a sideshow as the real game unfolds. The Fed dismissed any change to their current QE infinity and refuted any talk of ‘tapering’. The US GDP number came in at an expected 4%, following on from the massive unprecedented previous quarter, annualized gain of 33.4%!

EU Consumer Confidence has collapsed, a direct result of the ongoing and severe lockdowns suffered by most of Western Europe. The damage to the currencies after the equity crash, was somewhat mitigated overnight, with the EUR trading 1.2130, while the GBP pushed back to 1.3730. Rising jobless numbers in the US is a concern, while these numbers are well camouflaged in most economic data, by measurement techniques and welfare payments.

The NZ trade numbers were inline with expectations and the big losses in the NZD were mostly recovered overnight, pushing back up to 0.7180, while the AUD trade 0.7680. The big losses suffered were a direct result of rising risk fears and the safe haven reserve gains. Look for further volatility as economic poor performance is partially reflected in the statistical data being reporting.

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