Daily Market Commentary 11th February 2021

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Markets continue to trade at, or around record highs, after losing upward momentum. The German Government extended the lock-down until 14th March 2021, due to the mutating virus and the slow roll-out of vaccines. The other issue is the efficacy of the vaccine to the mutating strains, which could see the situation return to pre-vaccine destructive levels. German CPI was around 1%, while the US had a rising rate of 1.4%, which is considered a positive in todays ‘alternative economic theory’. The problem is that a rising CPI is a reflection of rising costs and prices in the economy and has been hugely understated because of the pandemic inspired price/cost slumps. Oil prices have been low, but the Biden administrations decision to clamp down on energy production domestically, should lead to huge supply side movements. Rising cost of living will add another worrying perspective to this economic crises. The EUR continues to gain ground, trading up to 1.2130, while the GBP pushed up to 1.3840.

The trade exposed commodity currencies have held ground in the face of a softer reserve, with the AUD trading 0.7725, while the NZD holds above 0.7200. Australian Building Permits surged 10.9% for the month, while consumer confidence reflects the position they hold compared to others, in terms of geographic protection. Local markets will look at Australian CPI numbers and NZ Credit Card spending in todays trade.

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