This week saw equity markets continue to move higher. The broad case remains that monetary stimulus and fiscal stimulus support will keep dip buyers engaged in the major indices. The main case against equity buying would be if there was the emergence of a brand new COVID-19 variant that was resistant to existing vaccines. Aside from general support in equity markets, there was a strange reaction in the USD to last week’s strong US data. It fell alongside US 10 year yields, which was somewhat unexpected. The USD will be a key theme to watch going forward.

Other key events from the past week

• AUD: Interest Rate Statement, April 06: The RBA kept to their dovish outlook this week. However, the risk here is that the RBA has been too dovish and the RBA may be caught out with a strong AUD if the economic recovery continues.
• FTSE100: UK investment, April 07: The FTSE 100 saw strong bids as investors start to move further into expectations of a swift UK recovery on a fast vaccine roll-out program. Will the FTSE 100 reach 7400 this month?
• USD: US 10 yields fall, Mar 26: US 10 year yields moved lower this week and that has caused dollar buyers to pause. The key level is the 93.00 handle on the Dollar Index, so that is where buyers and sellers can limit risk.

Key events for the coming week

• USD: Inflation, April 13: The Federal Reserve has said that they will allow inflation to run higher before raising rates, as they expect a temporary spike in inflation. However, expect the market to test that statement if inflation runs higher next week. A high inflation print would be expected to be USD positive.
• NZD: Interest Rate Statement, April 13: Expectations are the RBNZ will keep interest rates unchanged. However, will the RBNZ change their forward guidance next week and lift the NZD higher?
• USD: US 10 year yields, Mar 26: Will the USD bear trend resume next week or will buyers step in? Analysts are divided on the near term path of the dollar and it will be a key theme to watch next week.