Daily Market Commentary 11 July 2023

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Chinese inflation numbers were negative for June and zero, on an annualised basis. Western countries would only dream of these numbers, but in China this may worry some, as the much anticipated rebound in the ‘post-covid restricted economy’ stalls. Many expected China’s economy to roar back to life, following the lifting of restrictions, but recessionary pressures have quelled the enthusiasm, dampening Chinese demand for commodities. Danish and Norwegian inflation also tumbled, in line with expectations, which is a good sign for other European nations. The data markets are keen to see Germany and the USA, which are expected to follow suit, with inflation lower. US 10-year Bond Yields drifted back below 4%, while the US Dollar continued lower. The EUR pushed back up towards 1.1000, while the GBP trades 1.2850.

The softer reserve allowed commodity currencies to consolidate, with the AUD trading above 0.6650, while the NZD regains 0.6200. Markets will be watching inflation in Germany tomorrow night and the US, Wednesday, vindicating a more bearish monetary policy. The RBNZ is expected to hit the pause button on rate rises on Wednesday, while the Bank of Canada meets the following day and may buck the trend?

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