Daily Market Commentary 15th February 2023

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US inflation was higher than expected, sending US Bond Yields higher and equities lower. The US CPI reading was 0.5% for January and up 6.4% for the year, higher than the expected 6.2%. This number, although not shocking, is moving in the wrong direction and against the market narrative. It will steel the resolve of the Federal Reserve, to continue the war on inflation. Bond Yields jumped in the US and Europe, although the impact on the US Dollar was marginal. The EUR traded 1.0720, as the Eurozone eked out a 0.1% GDP reading, narrowly and conveniently avoiding a technical recession.

In Japan GDP growth barely made positive territory (0.2%), while Industrial Production contracted 2.4%, not helping the Yen. The change in Japanese Bank of Japan Governor has also caused nerves in the markets, awaiting his policy views, while the Yen weakened to trade 133.20. Australian business confidence was slightly higher, coming in at 0.6% for January, while inflation remains the key domestic issue. The US CPI was not good for global yields and the AUD fell below 0.6950, while the NZD looks to test the downside of 0.6300. Market speculation surrounding Central Bank reactions and narratives, will continue to dominate market trade, although US Retail Sales tonight will be closely watched to consider the impact on the consumer.

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