Daily Market Commentary 4th April 2024

European inflation continues to tumble lower, with both Austrian and EU headline inflation, falling for March. EU inflation fell more than expected, from 2.6% to 2.4%, green-lighting ECB rate cuts. The same sentiment applies across the Atlantic, although the 2 to 3 rate cuts this year, are not expected until the second half of the year. The US Dollar headed south overnight, allowing the EUR to surge back to 1.0830, while the GBP bounced back to 1.2640. Market focus may well turn to other important economic indicators, and certainly this week, Jobs will be the focus. The US Jolts reports was in line with expectations, but the ADP Report was much stronger than expected. Jobs grew by 189,000 in the Private Sector, showing stronger than expected economic conditions, and perhaps a reason for the Fed to defer rate cuts.

The flagging reserve allowed some recovery in commodity currencies, also boosted by the recent surge in commodity prices. The AUD bounced back above 0.6550, while the beleaguered NZD looks to regain 0.6000. Close attention will be paid to US Jobs data, although markets have been watching the price of Oil and Gold surging. Energy prices are a killer for Manufacturing and inflation.