Daily Market Commentary 15th December 2021

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Markets are laser focused on Central banks and their upcoming rate decisions. The Fed meet for two days tonight, ahead of an important press conference, followed by the Bank of England and the ECB. The Fed is under extreme pressure to end QE and to raise rates, to combat exploding inflation. The CPI came in last week at a 39 year high of 6.8%, while todays PPI numbers was the worst ever. US PPI came in a 9.6%pa, a full percentage point increase in just the last month and the highest since records began. The Fed are expected to cut QE and announce interest rate rises, for the new year. The ECB and Bank of England are not experiencing such dramatic inflationary pressures, but inflation is spiking and this is the economic cancer, that no Government or Central Bank desires to have.

The growing pressure to raise rates will impact currencies and bond yields, while putting pressure on equity bubbles. The USD gained ground, with the EUR slipping below 1.1300, while the GBP slid towards 1.3200. Commodity prices also drifted, due to economic fears and this translated directly through to the associated currencies. The NZD crashed back below 0.6750, while the AUD looks to test 0.7100, on the downside.

All eyes remain on Central Banks.

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