Collinson Forex Daily Market Commentary and Weekly Calendar

Daily Market Commentary

A largely negative start to market trading in the first week of 2024, highlighted by reemerging worries surrounding inflation, sparked by supply constraints from wars in the Middle East and Eastern Europe. The Middles East conflict has spread to the Red Sea, where the Yemeni's have decided to enforce a blockade on shipping, which has forced shipping to divert at the expense of cost and time. This will inevitably raise prices of goods and energy, adding to upward pressures on inflation. European inflation data is already reflecting this, with German and European inflation reversing recent trends lower, spiking up. German inflation rose from 3.2% to 3.7%, while EU inflation, jumped to 2.9% from 2.4%. This is a big concern to Central Banks, who had visions of easing interest rates and stimulating their recessionary economies, but now they may have to revert to the 'higher for longer' plan. European and US Bond Yields reversed the late 2023 collapse, spiking higher, boosting the EUR to 1.0930, while the GBP held above 1.2700.

The revival of inflationary pressures fed the reserve and commodity currencies reversed 2023 gains, with the AUD falling below 0.6700, while the NZD tests 0.6200 to the downside. Keen attention will be paid to Geo-Political issues in the coming week, as the effects are impacting supply therefore prices and inflation. Energy prices must we watched closely, as much of the inflationary spike has been due to non-energy rises, so any tightening of supply in Oil and Gas will flow directly into inflation and therefore the prospects for expected future interest rate cuts.

Weekly Market Calendar

8/1 German Trade Exports/Imports, EU Consumer Confidence/Retail Sales

9/1 Tokyo CPI, Australian Building Permits, France Trade/Exports/Imports, France Current Account, EU Employment, NFIB Small Business Optimism, US Trade Exports/Imports

10/1 Australia CPI, Denmark/Norway CPI, France Industrial Production, US Weekly Mortgage Applications

11/1 NZ Building Permits, Australia Trade Exports/Imports, US Inflation CPI, US Weekly Jobless Claims, German Current Account

12/1 Japan Current Account, China CPI/PPI, China Trade Exports/Imports, UK GDP/ Trade/Exports/Imports, UK Industrial/Manufacturing Production, France CPI, US PPI, Taiwan Elections