Daily Market Commentary 11th May 2023

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The much vaunted inflation data out of Europe and the US was a fizzer. US Headline inflation fell below 5%, while German inflation eased to 7.2% headline inflation. US Core inflation remains stubbornly high and inflation remains a worry, but concerns have eased. The Bank of England is expected to raise rates another 25 basis points tonight, but they have a particularly high inflation rate, due to fiscal imprudence and an ongoing energy crises. Market focus will turn to US PPI and Chinese CPI/PPI numbers. Inflation does appear to be on the decline, but all the factors (including massive  deficit/debt spending and an energy crises), remain. US Bond yields fell and the Dollar eased slightly, with the EUR bouncing to 1.0970, while the Yen   rallied back to 134.00.

Commodity currencies remained well bid, with the NZD holding strongly above 0.6300, while the AUD consolidates above 0.6700. Local markets will focus on the Chinese CPI/PPI numbers, which are expected to be well under control, while European markets will focus on the Bank of England.

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