Daily Market Commentary 20th March 2024

Markets were quiet, awaiting of the key FOMC meeting and rate decision/commentary, from the Federal Reserve Chairman. There is unlikely to be any change although the recent rises in inflation may influence the narrative. The real Central Bank action was from the Bank of Japan. The Japanese Central Bank announced an overhaul of their structural monetary policy controls, including moving away from negative interest rates (albeit only to zero), and removal of many controls. The BoJ removed yield controls, ETF and R/E debt and is phasing out the purchase of corporate and commercial debt. The Bank will rely on debt monetisation techniques to control interest rate. Investors were not impressed, and the Yen crashed towards 151.00. The markets were otherwise stable ahead of the Fed rate decision, with the EUR trading 1.0850, while the GBP drifted to 1.2720.

The RBA left rates unchanged, as expected, but talked a big game regarding their war on inflation. The commentary was ‘hawkish’, reinforcing their aggressive attitude towards inflation, while quietly removing any language referring to any future interest rate rises. This did not go unnoticed by markets and the AUD tumbled to 0.6500, while the NZD fell back to 0.6035, in sympathy. All eyes are on the Federal Reserve and their Chairman.