Daily Market Commentary 23rd January 2023

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The Chinese New Year kicked off over the weekend, promising week-long celebrations in China and across the Chinese diaspora. Asian markets will be quiet over the coming week, while European and US markets will look to reinvigorate the years positive sentiment, dented somewhat in the past week. The positive start to the year was tested over the previous week, with uncertainties over looming recession, growth and inflation. Energy prices continue to ease, chopping inflation down to size, but the Northern winter still has a tail. This coming week markets will again focus on growth and inflation, with reading from NZ and Australia, culminating in the important US PCE reading at the end of this coming week. The US Dollar remains soft, with the EUR holding above 1.0800, while the GBP is quietly moving up towards 1.2400.

Japanese inflation hit 4%, which is the highest the ‘Land of the Rising Sun’ has experienced since 1981, but is no surprise considering the Bank of Japan’s monetary policy. The RBA has also been circumspect in their monetary policy, fearing a collapse in the real estate market and this could manifest in a spike in inflation. The RBNZ has been aggressively attacking inflation and inflation should be tempered there, as the search goes on for a replacement PM. The softer reserve has allowed the commodity currencies to rebound, with the AUD pushing back above 0.6950, while the NZD regains 0.6450.

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