Daily Market Commentary 18th March 2021

The Fed announced a ‘no-change to interest rates policy’ and to continue QE Infinity until their targets are met. The economic forecast have become more bullish, with the Fed reviewing GDP up 2.3%, from 4.2% to 6.7% for 2021, while Unemployment was forecast lower to 4.5%. The strong economic expectations and the Fed’s reaction has calmed markets, with bond yields falling, equities rising and the US Dollar going lower. The continued QE Infinity will attempt to keep Bond Yields in check, although the market may not agree?

The EUR jumped back to 1.1950, while the GBP broke back above 1.3900, despite the complications surrounding the vaccine distribution and injection. EU inflation remained benign, below 1%, while the fed did comment that the economic recovery depends on the virus. US Mortgage applications fell, while both Building Permits and Housing Starts suffered sharp contractions, for the last month, February.

The flagging reserve allowed the trade exposed commodity currencies to rebound from recent selling pressure. The AUD jumped back above 0.7750, while the NZD approaches 0.7200, ahead of key GDP data to be released locally later today. Fed Chair Powell will hold a press conference to explain the latest rate decision and the view of the economy.