Daily Market Commentary 7th May 2021

The Bank of England followed the Fed’s lead and left rates unchanged, while leaving QE infinity in place. The lock-step Central Banks actions confirm concerted global action, allowing a co-ordination of the worlds monetary system. The new ‘Modern Monetary Policy’ would only work with the co-operation of the Federal Reserve, as they control the US Dollar, the reserve currency. The Bank of England mirrored actions by Central Banks across the world and marginalised inflation as transitory, while raising GDP growth expectations. Bond Yields will reveal the truth. The EUR jumped to 1.2050, while the GBP slipped to 1.3880, following the B of E statement. The UK are on a political edge, with local body elections in England and Scottish elections, which may raise independence questions once again. British and French warships are in a potential conflict zone, surrounding fishing rights around the Channel Islands, which has potential for escalation.

NZ Building Permits jumped 17.9%, while preliminary Business Confidence data was uncharacteristically positive. The surge in commodity prices has signaled a recovery in the commodity currencies, with the AUD trading up to 0.7775, while the NZD hit 0.7220. Local markets will look at the release of the latest monetary policy statement from the RBA, ahead of todays all important Non Farm Payrolls number. US Weekly Jobless Claims were lower and the Challenger Jobs report was positive, so expectations are high?