Daily Market Commentary 20th January 2022

European markets focused on inflation numbers, with both German and British CPI numbers rising. German CPI inflation hit 5.4%, in line with expectations, while UK CPI was higher than expected jumping 0.5% for the month. These are to be expected, but of great concern considering the inflationary problems facing Europe, in terms of the energy and supply chain crises. These rises also boosted the associated currencies, with the EUR rising to 1.1340, while the GBP jumped to 1.3620.

Canada also released their CPI number, rising to 4.8%, in a low growth economy. US Building Permits jumped 9.1%, while Housing Starts fell back to 1.4%, sending mixed signal to the markets in this leading sector. Inflation remains key to market growth and especially interest rates that impact funding costs and asset bubbles. The US equity markets appear to have peaked, towards the end of last November 21’ and now battle with the impact of the ‘pace of interest rate rises’ in a slow growth economy.

Commodity currencies regained some ground after the reserve drifted lower, with the AUD regaining 0.7200, while the NZD looks to regain 0.6800. Key Australian Employment numbers are set to be released during todays trade, while inflation data from both NZ and Australia may impact local market trade.