Daily Market Commentary 26th December 2022

The customary ‘Santa Claus Rally’ died in a puff of smoke, drowned by the miserable economic data and talk of global recession. The US PCE number was soft, in line with expectations, but not so much to tempt the Fed into changing monetary course. If anything, the latest massive deficit/debt spending bill ($1.7Trillion), which passed Congress, will only encourage more hawkish sentiment. The US political leaders are either completely oblivious and ignorant to the root cause of the inflation crises, or deliberately sabotaging the economic welfare of the country. The US Dollar drifted slightly into the Christmas holiday period, with the EUR regaining 1.0600, while the Yen trades around 132.50.

Bank of Japan minutes revealed little, other than, members are considering how to finally move out of the record low interest rate period and loose monetary policy. The Japanese CPI was in line with expectations, coming in a an annualised 3.7%, taking some pressure off the Bank of Japan. The coming week and final trading week of the year should be very quiet, with customary thin trading. There is little in the way of data releases, so commodity currencies should remain fairly stable, until the New Year. The AUD is trading around 0.6700, while the NZD floats around 0.6250.