Daily Market Commentary 17th April 2024

Markets are on high alert, closely following the situation developing in the Middle East, which has the capacity to increase market volatility. Oil prices will be a gauge of the escalation between Iran/US and Israel. An energy crisis would have the potential to blow up extremely vulnerable markets, especially through added pressure on oil supply, price and inflation. European ZEW Economic sentiment has jumped, but remains in negative territory, while UK Unemployment spiked upwards. The rise in Unemployment was expected, as the recessionary economic conditions prevail, but a 6% jump in wage growth will be inflationary and may deter the Bank of England from early rate cuts. US Manufacturing and Industrial Production remain flat, while Building Permits and Housing Starts reflecting a negative housing sector. Market volatility favours the USD, but the likelihood of early rate cuts from the ECB, has downward pressure on the single currency. The EUR fell back to 1.0600, while the GBP struggles to hold 1.2400, despite the employment data.

The reserve strength continues to torture the commodity currencies, with the AUD falling back to 0.6400, while the NZD crashed to 0.5870. Chinese GDP growth was better than expected, while markets await the Japanese Tankan report and key NZ inflation data.