US equity markets continue to celebrate the new Trump administration, posting new record highs on the S&P, and looking for positives in the opportunities. The surge in confidence has allowed the US Dollar to weaken, as capital takes flight from safety and risk appetite surges. The lack of tariffs was a huge relief to markets, although Trump has threatened tariffs in China over TikTok, and Mexico and Canada over immigration. The UK lodged a massive increase in Deficit/Debt spending last December, confirming the parlous state of the economy, especially the fiscal books. The EUR took advantage of the weaker US Dollar, consolidating above 1.0400, while the GBP traded around 1.2300.The weaker reserve allowed the resurgent commodity currencies to continue the recovery process, with the AUD rising above 0.6250, while the NZD trades 0.5650. NZ inflation was higher than expected, holding 2.2%, while markets expected a further fall. This is not a complete deterrent to the RBNZ, who hope to stimulate the ailing economy, with interest rate cuts next month, but it may temper the size of the cut. Markets remain on ‘Trump watch’ as every day seems to provide new surprises and shocks.
