Daily Market Commentary 20th December 2022

Markets opened the last week of trading before Christmas fairly subdued, with the fallout from last weeks Central Bank action still reverberating. The Federal Reserve led the charge, with a 50 basis point rise, but a hawkish monetary outlook. The ECB , Bank of England and Swiss National Bank all followed suit. Tight monetary conditions will bring recessionary pressures to bear and this will inevitably hit consumer demand. US and European equities continue to suffer the onslaught of monetary policy, but look forward to the customary ‘Santa Claus’ rally? The EUR held above 1.0600, while the GBP continued to trade above 1.2100.

NZ Consumer Confidence slipped even lower and Services PMI data also fell, while local markets look ahead to important trade numbers and Business Confidence. Australian markets await the release of the RBA minutes today, while the Bank of Japan announce their latest interest rate decision. They are expected to hold rates at record lows, despite signs of rising inflationary pressures in the economy, which adds to downside pressure on the Yen. The AUD crept back above 0.6700, while the NZD traded around 0.6350, ahead of the key data releases today.