Daily Market Commentary 21st September 2023

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The Federal Reserve left rates unchanged, but indicated a further rate rise was likely in this calendar year, with interest rates remaining ‘higher for longer’. The left markets non-plussed, as this was directly in line with expectations. This was the stable process of unwinding the blowout in inflation that markets are looking for. Economic conditions look good for the next quarter, but there is a proviso, and that is energy prices. Oil has been on the march, as Saudi Arabia and Russia continue to impose supply restrictions, thus adding pressure to energy prices and the impacting inflation. The UK inflation rate fell to lower-than-expected levels, which will be good news for the Bank of England, who make a rate decision and monetary policy adjustments tonight. This pushed the GBP even lower, which traded down to 1.2340, while the EUR held below 1.0700.

The Fed’s inaction was enough to allow the commodity currencies to consolidate. The AUD pushed back towards 0.6500, while the NZD built above 0.5900. Market are now looking towards the Bank of England and Bank of Japan, while local markets will look at GDP growth. 

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