Daily Market Commentary 18th February 2021

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US economic data continued to disappoint, with the leading sector of housing, looking soft. US Housing Starts contracted 4.1%, while Building Permits were positive, but barely. The Philly Fed Manufacturing Index plunged to new lows, expanding at a much slower rate than expected. The FOMC minutes were released the previous trading day and although indicating the Fed were ready to raise interest rates, the necessary aggression was not there. This allowed markets a slight relief rally, that has been summarily dismissed, in todays trade. The EUR drifted back to 1.1350, while the GBP broke back above 1.3600, after recent inflationary pressures were confirmed in their data.

Commodity currencies have been beneficiaries of rising prices and a softer reserve, with the NZD pushing back towards 0.6700, while the AUD approaches 0.7200. Australian Employment numbers were steady, if you look at the trendline, but farcical if you look for actual ‘real’ employment numbers. Japanese Machine Orders jumped 5.1%, following a surge of 11.6% increase in the previous month, signalling a gearing up of production. Japanese trade numbers revealed frightening numbers and a huge deficit, while exports rose 9.6%, imports surged by 39.6%! Some of this can be put down to surging capital investments and imports, but much of this can be attributed to soaring energy costs and a weaker Yen.

Local markets may pay particular interest in the release of the NZ PPI number?

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