Daily Market Commentary 13th December 2022

Global markets will be dominated by Central banks this week, both in terms of speculation and action. The FOMC begin a two-day meeting tonight, which is expected to result in a 50 basis point rise. Markets are still talking ‘peak-inflation’ and this may well be the case? US and German inflation data will be released tonight and is expected to confirm the overwhelming consensus. If German inflation holds above 10%, considering the fall in energy prices, then pressure will mount on the ECB. US inflation is expected to fall from 7.7%, to 7.3%, and misses in either direction, may have profound effects on equities. Wednesday will be the big Fed announcement, followed by the Bank of England, the ECB and the Swiss National Bank, on Thursday. The EUR traded above 1.0500, while the Yen has plunged back to 137.50, as inflationary pressures increase.

Commodity currencies are not faring to well, with recession fears across Europe, dampening demand. The AUD has fallen back below 0.6750, while the NZD softened, to trade 0.6370. Commodity based economies have fared well during the energy and food crises in Europe, but a recession would hit commodity prices hard, directly impacting the performance of the associated currencies. All eyes remain on inflation data and the Central Bank speculation and actions.