Daily Market Commentary 10th May 2024

The Bank of England left rates unchanged, as did the Central Bank of Poland, in line with expectations and the Fed. The BofE is coming closer to cutting rates, as more Board members voted for cuts, than the previous meeting. Analysts are predicting a rate cut by August, perhaps sooner, depending on the inflation pathway. The UK and Europe have beaten inflation with deep recession, and any recovery must be assisted by rate cuts and monetary easing, while controlling fiscal spending. The US is behind the curve and is experiencing renewed inflationary pressures and flagging growth. Bond yields were slightly higher in Europe and the US, while the US Dollar was softer. The GBP regained 1.2500, following the BoE decision, while the EUR drifted back to 1.0730.

Chinese Trade surged, with both rises in exports and imports. This was welcome news to commodity currencies, with the AUD regaining 0.6600, while the NZD reposted 0.6000. Local markets will watch NZ Business PMI and any moves from the Bank of Japan, while a slew of economic data points from the UK will influence markets later today.