Daily Market Commentary 14th June 2023

Inflation numbers were better than expected in the US and Germany overnight, allowing markets to breathe easier and odds rose, on the Federal Reserve pausing the long string of rate rises. Headline US inflation tumbled to 4%, while core inflation slipped from 5.5% to 5.3%. Inflation remains stubbornly high, but the headline number is falling fast, green-lighting the Fed. The German inflation number was also falling fast, plunging from 7.2% to just 6.1%. The ECB is expected to raise rates a further 25 basis points, despite the positive inflation data, to levels approaching that of other major Central Banks. The UK employment number was better than expected, with the headline unemployment rate falling to 3.8%, while wage growth surged. This is not what the Bank of England has been looking for, thus green-lighting further rate rises from the Bank of England, lending upward pressure to the currency. The GBP jumped to 1.2600, while the EUR also rallied to 1.0800, as interest rate beneficials improved.

The good news for on the inflation front allowed the reserve to soften, with the NZD consolidating above 0.6100, while the AUD looks to regain 0.6750. Markets now look ahead to Central Bank monetary policy decisions.