Collinson Forex Daily Market Commentary

Daily Market Commentary

Equities in Europe and the US continue to rise, while bond yields and the US Dollar drift lower. The Federal Reserve Chairman Powell has restated the need for restrictive monetary policy, saying interest rates 'needed to remain elevated for an extended period'. The precipitous fall in inflation in 2023, has halted and inflation has begun to rise again in the US. The latest PPI number came in higher than expected, rising 0.5% for April, which may be a bad omen coming into tonight's release of the latest CPI number. In Europe both German and Spanish inflation inched higher, but bond yields remain steady, as interest rate cuts are expected sooner rather than later. The US Dollar was softer and allowed the EUR to push up to 1.0780, while the GBP heads towards 1.2600.

The softer reserve allowed the recovery in commodity currencies to continue, with the AUD consolidating above 0.6600, while the NZD pushed up towards 0.6030. NZ Credit Card spending was weaker than expected and Japanese PPI inflation numbers, were higher than expected. The Japanese Yen pushed back into dangerous territory, up to 156.50, with bond yields also on the rise. The problems in Japan and with the Yen, are approaching crises point, and will need serious intervention from the Bank of Japan and the Government, on a fiscal level. All eyes now turn to the US CPI inflation number, due out tonight, which is expected to be hot.

PLEASE NOTE THE VIEWS EXPRESSED IN THIS COMMENTARY ARE THOSE OF THE AUTHOR AND NOT COLLINSON & CO

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