Collinson Forex Daily Market Commentary

Daily Market Commentary

US GDP growth crashed in Q1, confirming the vulnerabilities in the US economy, while PCE inflation indicated that inflation was surging. These two extremely important economic measures, taken together, point to a 2023 economy growing on fiscal stimulus and fuelling the inflationary pressures the Federal Reserve is attempting to defeat. Manufacturing growth in the US has been extremely weak, in fact could be termed manufacturing contraction, as it in Europe in spades. The economic performance for 2023/24 could be just a 'house of cards' and the persistent and damaging inflation, could be the trigger to collapse that deeply vulnerable shack. Equities tumbled, on the economic news, and bond yields spiked sharply higher. The US Dollar remained surprisingly weak considering the yields, as the EUR traded 1.0720, while the GBP pushed back to 1.2500.

The weaker reserve allowed the commodity currencies to consolidate, with the AUD regaining 0.6500, while the NZD secured 0.5900. Local markets await the Bank of Japan latest interest rate decision, which is expected to be a hold, although the unheralded weakness in the Yen (155.75) may illicit some surprises. Tokyo CPI inflation will also be an important data point, while Australian PPI numbers will give further insight into Australia's stubborn inflation problem.

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

Paul Bettany   I   Collinson Forex Limited    Collinson & Co.  Private Banking   

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