Markets in the US rebounded strongly, following the Memorial Day long weekend, after Trump postponed the imposition of the ‘50% tariff’ on all EU products and services. The deferment follows a hasty phone call from EU leadership. The US relief rally was strong and extended to the bond market, with yields softening. German consumer confidence remains in the doldrums and is unlikely to change soon. The new Chancellor appears to be focusing on war, rather than peace, and the economy. The EUR traded below 1.1350, while the rally in the GBP continues, pushing up to 1.3500.Commodity currencies remained steady, despite all the action on global equity markets and ahead of today’s RBNZ interest rate decision. The RBNZ is expected to slash another 25 basis points, despite warning signs of inflation returning to the economy. Ordinarily a further rate cut would ensure a fall in the currency, but the opposite happened last time. Interest rate differentials will become larger, and more attractive to investors, driving sales in the KIWI.
