Daily Market Commentary 23rd September 2021

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The Fed left rates unchanged, as expected and promised ‘QE tapering’ anon. This is as expected and cautious. The Fed have recognised the inflation issue, reviewing their inflation rate expectation up from 3.4%, to 4.2%! The Fed continue to insist that this is a ‘transitory’ problem, but I believe this is an attempt to continue with their emergency monetary expansionism. US Markets continued on, unaffected, with equities improving and bond yields settling, while the US Dollar edged lower. The EUR improved to 1.1740, while the GBP pushed up to 1.3670, ahead of the Bank of England rate decision.

Commodity currencies experienced some relief, following the FOMC meeting, pushing the reserve lower. The AUD managed to push back to 0.7280, while the NZD bounced strongly off 0.7000. Markets will now focus on the Bank of England rate review. The Bank of England is likely to be far more hawkish and reduce QE, while perhaps signalling a rate rise? Asian markets will be looking to the ongoing Evergrande saga, with the default expected today, if a Chinese Government bail-out is not forthcoming.

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