Daily Market Commentary 19th March 2024

US and European markets opened the week on a positive note, following some positive economic data out of China and looking ahead to key Central bank meetings. Chinese Industrial Production jumped 7%, while Retail Sales remained strong, which augers well for the Chinese economy and flow-on to the world economy. Asian markets will be closely focused on the Bank of Japan and a long-awaited change in monetary policy. The Bank of Japan meet today, and are expected to move away from long-held negative interest rates, for the first time since the last crises. The move can be seen as a huge positive, and may lend some support, to the much-maligned Japanese Yen. The RBA also meets today, but expectations are that they will leave interest rates unchanged, with the attention on the accompanying narrative. European Inflation data for February, was also released overnight, and they experienced a reversal in recent trends downwards. Inflation jumped 0.6%, but the headline annual rate fell back to 2.6%. It is a worrying trend to see the reversal in inflationary pressures, in both Europe and the USA, and this may give the Fed and the ECB pause to hold rates ‘higher for longer’. The EUR was unmoved by the inflation news, trading around 1.0850, while the GBP regained 1.2700.

The steady reserve allowed the commodity currencies to hold last week’s levels, with the NZD trading 0.6070, while the AUD trades 0.6550 ahead of the RBA interest rate decision, All eyes remain on the RBA and Bank of Japan, which will then pivot to the FOMC, meeting beginning tonight.