Daily Market Commentary 12th April 2023

European and US equity markets began the week on a positive note, as they look ahead to key inflation data, coming out in Europe and the USA. US CPI inflation is due for release tonight and PPI for the following day. Expectations are high, for a substantial fall in US inflation, down to around 5%. Inflation has remained stubbornly high and core inflation will be keenly watched as the Federal Reserve considers their monetary options. European inflation has been falling and this was confirmed in Danish inflation numbers, although the Norwegian numbers continued to rise, keeping fears alive. The ECB is hawkish and has indicated they will continue to raise interest rates. The EUR fell back below 1.0900, while the GBP is softer again, testing 1.2400 to the downside.

The firmer reserve continues to add downward pressure to commodity currencies, with the AUD dropping below 0.6650, while the NZD crashed below 0.6200. The RBNZ rate hike and rising interest rate differentials, did not support the currency for long and asks more questions than it answers? All eyes are focused on the US CPI number released tonight.