Daily Market Commentary 17th April 2023

Retail Sales in the US contracted by 1%, a much sharper fall than expected, foreshadowing the much vaunted recession? This past week has been all about inflation, which is on the decline in both Europe and the USA. This has allowed Central Banks some breathing room and taken the urgency out of tighter monetary policy. Core inflation remains stubbornly high and energy prices are surging upwards, once again. OPEC+ has introduced substantial cuts to oil supply, partially in response to a looming global recession and summer slackening demand. The US Dollar bounced back to close out the week, with the EUR falling back below 1.1000, while the GBP fell back to 1.2400.

The resurgent commodity currencies closed out the week softer, in the face of a stronger reserve, with the AUD falling to 0.6700, while the NZD dropped back to 0.6200. NZ inflation will come into focus this coming week, giving some clues as to why the RBNZ was so aggressive in their interest rate rises. The RBA minutes release will also answer some questions as to why the Bank was so dovish in their decision to pause rate rises. The higher interest rates are feeding back in to the consumer and disposable income, which will drive the recession. Australia and NZ avoid technical recessions, by the only way they know how in recent times, ramping up immigration.