Daily Market Commentary 19th February 2021

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US market sentiment turned sour overnight, dragging equities lower, as the reality of the economic environment is considered. There is no silver bullet for the economic recovery. The virus and vaccine roll-out are fallible and will take time. The road to perdition is a long and painful one and politicians have chosen this route to combat the virus. Existing protocols, that have been in place for many decades, advised quarantine of the sick and infirm, while society carried on as normally as possible. This was ignored in favour of complete social and economic lockdowns, which destroys peoples mental and physical health, all the while ripping the heart out of global economies. History will not judge the current crop of politicians well.

US Weekly jobless claims jumped and the previous weeks were revised sharply upwards, while housing data was mixed. US Housing Starts contracted 6%, while Building Permits jumped 10.4%, sending mixed messages. The recent spike in Bond Yields has spooked markets, with the rising cost of living pressures and negativity surrounding more expensive debt. The inflationary pressures are transitioning from good to bad, as a market perception. The US Dollar recovery took a breather, with the GBP leaping to 1.3965, while the EUR regained 1.2080.

Commodity currencies were beneficiaries of the drifting reserve, with the NZD regaining 0.7200, while the lackluster AUD held around 0.7750. The Australian headline Unemployment rate fell to 6.4%, but the data was unimpressive, as participation rates fell along with part time jobs. The employment statistics continue to camouflage reality, with welfare payments from the pandemic, still disguising true numbers. Flash PMI data in Australia and Japan may impact local trading.

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