Daily Market Commentary 16th February 2022

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Tensions eased in the Ukraine overnight, with the Russians signalling a ‘return to base’ of their military, in an attempt to de-escalate the situation. European and US equity markets reacted accordingly and rallied strongly. US Bond Yields resumed their upward momentum, following the latest release of PPI data, which came in at around record levels, once again. The PPI came in with an increase of 1% for the month and 9.7% annualised, meaning input prices will continue to fuel runaway inflation. Normally this would increase upward momentum from the US Dollar, but the relief from the Ukraine, allowed the safety play to unwind the pressure. The EUR rallied to 1.1350, while the GBP traded 1.3525, following steady Employment numbers (headline rate of 4.1%).

The commodity currencies were relieved by the softer reserve, with the NZD bouncing off 0.6600, while the AUD pushed back up to 0.7140. Japanese GDP growth numbers rebounded, rising 5.4%, at an annualised rate. The RBA minutes were dovish and showed the Central Bank was in no hurry to begin raising interest rates. Markets will now look forward to the release of the FOMC minutes, later tonight, which will be a lot more hawkish.

Geo-Political issues remain in the markets purview, with global protests potentially further disrupting supply chains.

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