Daily Market Commentary 24th February 2023

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The Federal Reserve minutes were released and they were as expected, hawkish. The Fed are committed to holding the line on interest rate rises until the war on inflation is over. Inflation looks to be bubbling away in Europe, with rebounds upwards in Germany and Austria, although EU inflation has come in lower than expected (8.6%). The certainty of rising interest rates, has boosted market yields across Europe and the US and caused some reaction in the currency market. The US Dollar has continued to rise, with the EUR falling to 1.0580, while the GBP slipped below 1.2000.

Commodity currencies are also suffering the stronger reserve, with the AUD dropping under 0.6800, while the NZD looks to test the downside of 0.6200. The RBNZ strong interest rate hike on Wednesday was long forgotten and a thing of the past. US GDP growth fell to 2.7%, below the 3% expected by markets, while attention now turns to the PCE inflation indicator, due out tonight.

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