Daily Market Commentary 16th December 2021

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Markets were cautious ahead of the two-day Fed meeting. Inflation has been robust, in the lead up to the meeting and measures are expected to be taken. The Fed Chairman Powell is expected to react, in line with expectations, considering the history of denial he has misleadingly foisted in the markets.  He will have to recognise that the CPI inflation rate is higher than it has been in nearly 40 years and the PPI recently hit 9.6%, the highest on record! The politics has been rationalised by reality.

The Fed is expected to attack inflation and cut QE, while signalling interest rate rises in the New Year. The Bank of England has also been hit with inflationary pressures, with the CPI jumping to 5.1%, while PPI hit 7.9%. The historical data was surprising considering the economy was shut down for much of the year. The latest mutation of the virus is pushing the political leaders into further economically destructive actions, so the economy is likely suffer accordingly. The GBP drifted to 1.3220, while the EUR fell back to 1.1250.

Commodity currencies remain troubled, with the AUD falling to 0.7120, while the NZD crashed through 0.6750. All eyes remain on the Fed.

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