Markets rallied across Europe and the US to close out a week of gains, ahead of the ‘much anticipated’ Trump inauguration, scheduled for Monday 20th January. This is also a holiday in the USA, celebrating MLK Day, meaning markets will not register the festivities and announcements until Tuesday trading, a long weekend in effect. Market fears over the impact of tariffs on trade, will be closely watched, and a deluge of Executive Orders are expected Monday. The US Dollar has been softer, of late, as have US Bond Yields, coming of recent highs. This has allowed the EUR to recover back towards 1.0300, but damaging economic data from the UK, has pushed the GBP below 1.2200.
The weaker reserve has allowed the commodity currencies to stabilise, with the AUD regaining 0.6200, while the NZD struggles to reach 0.5600. It will be a big week for the NZD, with the latest inflation reading expected to be benign, while the last GDP number confirmed the NZ economy is in recession. The heat is on the RBNZ to make a big rate cut in February, in order to stimulate the economy, but this will potentially undermine the KIWI.
