Daily Market Commentary 5th May 2023

The ECB raised rate 25 basis points, as expected, recognising the resurgent inflation in the European economy. The latest inflation rate from the EU was 7%, but in some member states, earlier softening of inflation has been reversed and is once again moving higher. The GDP growth in the EU has flatlined, which should assist  in the battle against inflation, but the war in  the Ukraine and energy sanctions remain in place. In the US the banking crises continues to boil away, in the regional banking sector, with share prices falling in PACWEST and others. The Challenger Jobs report was an improvement on last month, but still showed high levels of job cuts, adding to the mystery of the Non-Farm Payroll number, due out later tonight. The EUR drifted lower following the rate rise, holding above 1.1000, while the GBP traded up above 1.2550.

Commodity currencies were stable, with the AUD trading above 0.6650, while the NZD pushed back above 0.6250. Strong Australian Trade data, lead by surging exports, is a boost, but key commodity prices remain under pressure. All eyes turn to the important Non-Farm Payroll number and to see how Fed rate hikes, are impacting the Labour market.