Daily Market Commentary 8th March 2023

The Federal Reserve Chairman Powell surprised markets overnight, with a far more hawkish testimony, than expected. Powell advised that the Fed would be prepared to push rates higher, than previously expected and at a faster rate, as economic data is stronger than expected. The surge in jobs added for January (517,000), in the Non-Farm Payrolls number, was a blow-out and ‘green-lighted’ the Fed’s aggressive actions in fighting inflation. All attention will turn to Friday’s latest NFP’s number, which is expected to be a much more moderate number, around 225,000. Any beat on this, will cause further mayhem in currency, bond and equity markets. The US Bonds spiked on Powell’s comments, which drives the US Dollar higher and equities lower. The EUR fell back below 1.0600, while the GBP crashed to 1.1850.

The RBA raised rates for the 10^th consecutive meeting, to 3.6%, still well below the Federal Reserve levels, hoping inflation is not as aggressive as in Europe and the USA. Hope is not a great strategy. The Australian media have piled the pressure on the RBA Governor, as the people feel the heat directly, in the form of spirally mortgage repayments, on overburdensome debt levels. Chinese trade data was weaker than expected in January and February, due mainly to a fall off in demand from  a recessionary Europe, reducing demand for imports from commodity countries. This was reflected in the associated currencies, with the AUD plunging below 0.6600, while the NZD collapsed towards 0.6100.

Markets will continue to monitor the Fed Chairman Powell’s, as he makes another appearance in front of Congress tonight and then all attention will focus on the all-important Non Farm Payroll number, released Friday! Chinese trade is important as the war in Europe threatens China and possible sanctions?