Daily Market Commentary 16th September 2021

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Chinese Retail Sales were significantly lower, while Industrial Production also fell by more than expected, pushing a negative sentiment across Asian markets. The Japanese Tankan Report showed the Covid virus was impacting Japanese manufacturing and sentiment. The UK suffered a blowout inflation number, exploding from 2%p.a., to 3.2%, which is the largest increase since records began. The input prices are contributing heavily to the rises in inflation, with the PPI increasing 11%p.a., while the reopening is causing a massive wave in retail price rises. This will demand action from the Bank of England, in the form of not just tapering QE, but interest rate rises. The Bank of England will be only the first and most major Central Banks will be forced to follow suit. The EUR was steady on 1.1800, while the GBP traded 1.3830, despite the shocking inflation number.

These numbers will be being noted in the Central Bank ivory towers across the world. The commodity currencies were steady, with the AUD trading 0.7320, while the NZD attempts to hold 0.7100. Local markets will focus on the NZD GDP number, expected to be 1.3% for Q2, while Australian markets will focus on Employment numbers and inflation. The lockdowns will not be reflected in the historical data, as most of them were not instituted until Q3. That little shocker still awaits both NZ and Australia.

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