Daily Market Commentary 20th September 2023

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EU inflation was slightly softer than expected, dipping to 5.2%, but remains at far too higher levels. Canadian inflation jumped up to 4%, from 3.3%, reversing the recent trends and spiking upwards. Oil and other energy prices are beginning to impact economies, driving inflationary pressures, ahead of key Central Bank rate decisions. The Fed will lead things out, while the Swiss National Bank, the Bank of England and the Bank of Japan will follow. UK CPI numbers will be released tonight and are expected to show elevated inflation levels, which may push the Bank of England to raise rates further. The Fed may hold rates unchanged, but inflation and energy prices are beginning to heat up. Bond Yields in Europe and the US are creeping higher and the pressure on Central Banks is building. The EUR still remains below 1.0700, while the GBP trades below 1.2400, ahead of the key inflation data and the Bank of England rate decision.

The RBA minutes revealed the RBA was balancing testing economic conditions with inflationary pressures. The RBA singled out weak economic conditions in Europe and China, while emphasising the rising price of oil. The RBA is under a new regime, with a change in Governor, battling heavy political headwinds. The easing reserve allowed the AUD to bounce off 0.6400, while the NZD regained 0.5900. All eyes are on inflation and Central Bank speculations and actions.

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