Daily Market Commentary 20th June 2023

Market attention is focused on interest rates and growth in the UK, ahead of yet another key meeting of the Bank of England. The UK has the highest inflation rates in Western Europe and the latest CPI will be released tonight, which is expected to confirm the inflation rate has fallen to 8.5%. This is far, far too high for the Central Bank and they are expected to raise rates a further 25 basis points. This is impacting the housing market, with mortgage rates spiralling upwards, while the consumer is being crushed. The Central Bank has little choice, but to fight the war on inflation, while bond yields (Gilts) rise to crises levels. The GBP traded 1.2750, ahead of the meeting, while the EUR held above 1.0900.

The rising reserve pushed the NZD back below 0.6200, while the AUD holds above 0.6800, ahead of the release of the RBA minutes today. Markets keenly await testimony from the Chairman of the Federal Reserve, Powell, before Congress on Wednesday and Thursday.