Daily Market Commentary 25th November 2022

The Fed minutes offered hope to the markets and they took it, hook line and sinker. The Fed minutes clearly outlined that rates would continue to rise, in the war on inflation, but at perhaps a smaller increment? This was enough for markets to entertain the pivot/pause scenario and equity markets reflected this. US markets are headed off for the long Thanksgiving weekend and do so with a spring, in their collective step. Equities rallied, Bond yields fell, as did the mighty US Dollar. The EUR rallied to 1.0365, supported by the ECB’s aggressive narrative in the fight on inflation, while the GBP broke back above 1.2000.

Commodity currencies were advantaged by the weaker reserve, with the AUD rising above 0.6750, while the NZD broke back above 0.6200. The long weekend in the US will insure that the positive sentiment will remain, but underlying economic data and the Northern winter remain big threats.