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Daily Market Commentary 19th June 2024

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European CPI data confirmed a rise in inflation, following the ECB’s rate cut, which does not auger well. The recessionary conditions, that have savagely cut inflation continue, but inflation remains stubbornly high. The economic environment that triggered the surge in inflation, remain in place, with record deficits and debt and energy prices remaining prohibitively high. The EU ZEW Economic Sentiment report was a positive and pushed up above the key 50 level, while Germany’s ZEW Economic Sentiment remained gloomy. US Retail Sales remain depressed, while Industrial and Manufacturing Production turned slightly positive. Manufacturing in both Europe and the US remain heavily depressed. The softer numbers lead to softer bond yields and US Dollar, with the EUR pushing up to 1.0730, while the GBP trades around 1.2700.

The RBA left rates unchanged and confirmed an interest rate rise was considered, as inflation remains a serious problem. It is not a surprise considering the massive immigration inflows. This was enough to underwrite the AUD, which pushed back up towards 0.6650, while the NZD consolidates above 0.6100. Local markets will look at the Japanese Tankan report, Japanese Trade and the BoJ minutes today, while the NZ Current Account is expected to remain heavily negative. UK inflation data will also be a focus ahead of the latest Bank of England rate decision.

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