Daily Market Commentary 5th January 2022

The DOW reached all-time record highs overnight, as the 2021 rally continues, funded by masses of liquidity and growing market sentiment. The Omicron rendition of the virus has spread like wildfire, but has not been the deadly apocalypse of previous variations. This may be the final blow to the pandemic, allowing the worlds population to gain herd immunity and finally move on from the historically destructive pandemic.

US economic data was steady, with PMI data flat and ISM PMI actually contracting. German Retail Sales contracted 2.9%, while headline Unemployment dipped to 5.2%, lower than expected. The economy appears to be in recovery mode and equity markets are reflecting this, while growth and inflation data is so far benign. US Bond Yields continued to rally strongly, with the 10 year hitting 1.67%, while the US Dollar remains well bid. The EUR continues to trade below 1.1300, while the Yen broke 116.00 overnight.

Commodity currencies enjoyed some support, with the AUD jumping to 0.7240, while the NZD looks to regain 0.6800. The rising economic sentiment has pushed demand driven commodity prices, despite a resurgent reserve. Market attention will turn to inflation and growth, while the Non Farm Payrolls will provide speculation for the remainder of the week.