Daily Market Commentary 29th March 2021

US equity markets rallied strongly to close out a mixed week, dominated by the third wave of the virus smashing Europe and the Federal Reserve. The Fed lifted future restrictions on ‘Bank Buy Backs’ and dividend restrictions, boosting banks and sending a message of normality to markets. The Fed has been extremely bullish towards the economic recovery and the market is now accepting the rise in interest rates. The recent bull run of the US Dollar, took a spell, with the EUR settling just below 1.1800, while the Yen traded 109.50.

Markets are inherently forward looking and trade on that, while most statistical data releases are historical, thus creating a real time conflict. The University of Michigan economic sentiment report was bullish for the US economy, while the German IFO report was more positive than it had been in nearly two years. The coming week is a shortened trading week leading into Easter, which will be dominated by US Employment data and global growth.

The surge in the US Dollar exemplified inherent weakness in the NZ Dollar, following some badly received local tax policy relating to the housing sector, which is at the heart of many NZ consumers wealth and thus demand. This sent the KIWI crashing back below 0.7000, while the AUD Dollar was also not immune, falling to 0.7600. The coming week will be dominated by  US employment and  global growth data.