Daily Market Commentary 13th June 2023

Markets are in a positive mode, early in the trading week, looking ahead to German and US inflation data tonight and Central Bank monetary policy statements later in the week. German inflation has been tumbling lower and this is expected to continue, while US inflation is expected to fall into the 4%+ range. Inflation is the key determinant for Monetary Policy as markets keenly await the Fed’s latest decision, scheduled for Thursday. The Fed is expected to pause the long series of rate rises, although the stubbornly high ‘core inflation’ remains a threat. The ECB is also scheduled to raise rates on Thursday, as they are way behind on the yield curve, despite inflation is crashing across the Eurozone. The EU and Germany are in a recession, so the pressure is building on the ECB to leave rates unchanged. The Bank of Japan is the final major Central bank to announce their rate decision, with no changes expected, in line with their steadfast monetary position. The USD remains subdued, with the EUR trading around 1.0750, while the GBP drifted back to 1.2400.

Commodity currencies continue to benefit the softer reserve, with the AUD approaching 0.6750, while the NZD holds around 0.6100. Japanese PPI data was released yesterday, showing that inflationary pressures were low in Japan, as in most of the Asian powerhouse economies. Local markets will look closely at Australian Consumer and Business Confidence data, due to be released today, but most attention will focus on European and US inflation numbers.