Daily Market Commentary 10th January 2023

European markets continued to rally strongly, adding to strong gains for the year so far, buoyed by the easing energy crises and ‘peak inflation’. Chinese re-opening also adds to the positive environment, shrugging off talk of a deep European recession. The Swiss National Bank suffered massive losses, the highest in history, rocking the Swiss economy. The SNB is not an island and the ECB and Bank of England will be in similar positions, delivering massive losses. The RBA and RBNZ will suffer similarly, as this sharply increasing interest rate environment re-values assets, at massive losses. Positive sentiment spread to US equity markets, while Bond Yields continue to drift lower. The EUR rallied to 1.0750, while the GBP looks set to regain 1.2200.

The flagging reserve allowed gains for the commodity currencies, also aided by the positive markets. The NZD rallied strongly above 0.6350, while the AUD pushed above 0.6900, despite dreadful Building Permits numbers. Markets are banking on the ‘peak inflation’ numbers and the end to the global energy crises. It has been a mild winter in Europe, thus far, but the Ukraine war continues and there are serious threats to markets and economies out there.