Daily Commentary 31/10/2014

The DOW surged towards record levels after US GDP numbers confirmed the recovery is finally underway. The Fed are well aware of the state of the economy and could not continue QE. GDP rose 3.5%, for the quarter and has finally shown signs of life, in the world’s largest economy. Oil prices continue to act as a stimulus to the US and global markets. Europe may benefit from the recovery in the US but still remains mired. The Dollar should make every post a winner as the Fed withdraws stimulus. The EUR traded 1.2600, while the GBP struggled to hold 1.6000. It is hard to see the UK really improve while the umbilical to Europe remains. The RBNZ threw the anchor out and held the interest rate rises. Reality hit home rather than a realization that their strategy is premature. The KIWI staged a recovery, after the previous hit, triggered by a resurgent Dollar and now trades 0.7820 supported by a huge interest rate differential. The AUDUSD broke back through to 0.8810 with rising confidence. Some very positive moves in markets may test highs but geopolitical issues remain a constant threat and fiscal tragedy is inbred in the EU. The NZD booked small gains against the EUR, GBP and JPY overnight to trade 0.6190, 0.4875 and 85.30 respectively.