Daily Market Commentary 15th June 2021

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This week will be dominated by the FOMC two day meeting. Will the Fed address the record CPI numbers, confirming exploding inflation in the US economy, or will they continue to insist on labelling it transitory? The last blow out number of 5%, was following the previous months 4.2%, which are records since 2008. The RBNZ and Bank of England have both recognised the threat inflation poses to their economies and indicated monetary policy tightening to come. Will the Fed act? Strong pressures remain for them to continue QE Infinity and extend the record low interest rates. Debt would become more difficult to service and asset bubbles would look extremely testing.

EU Industrial Production expanded 0.8% for the month and 39.3% for the year, reflecting the pandemic bounce was coming to an end. The EUR traded 1.2100, while the GBP held 1.4100, which may be tested with lockdown restrictions likely extended. The reserve was stronger, with the AUD testing 0.7700, while the NZD slipped to 0.7130. Local markets will closely monitor the RBA minutes released later today.

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