Daily Market Commentary 19th April 2024

European markets have been boosted by a range of European National Central Bankers, that have come out in support of rate cuts from the ECB, in June. The opposite has been true of the Federal Reserve, with Chairman Powell remaining reticent, looking for inflation to return to the 2% target levels. US inflation spiked back upwards in their latest reading, while European and British inflation continues to tumble lower. Market speculation has led to a growing divergence in interest rate differentials, which encourage a stronger US Dollar. The underlying threat to markets and inflation is energy supply and price. The Middle East has the potential to escalate further, and this will only add to the drama on equity and bond markets. The EUR trades 1.0640, while the GBP drifted back towards 1.2400.

The rising reserve has been a cudgel to commodity currencies, with the AUD falling back to test the downside of 0.6400, while the NZD looks set to dip below 0.5900. Asian markets will be focused on Japanese inflation data, set for release this morning, while Australian unemployment ticked slightly higher to 3.8%. India goes to the polls this weekend, and Modi is expected to win, once again. The economic performance of this global economic giant has been stunning over the last year or so, with massive investment and growth, boosting the long-time incumbent.