European and US equities surged overnight, driven by market sentiment, headed into the close of 2022. Energy prices have fallen, with gas prices in Europe falling to pre-Ukraine war levels. Plunging energy prices have sparked renewed enthusiasm on markets, as the energy crises has been a major driver of inflation, allowing speculation on ‘peak inflation’ to return to the market narrative. This does not account for the massive deficit/debt spending, fiscal recklessness and monetary incompetance. The massive expansion of the money supply, has been the major driver of inflation, as digital currency expansionism has reduced the value of currencies across the Western world. It may be too soon to tell, but if the energy crises is ending, then it will be a major step forward in the economic recover. The USD drifted lower, with the EUR pushing back to 1.0650, while the GBP crept back up to 1.2050.
The flagging reserve allowed commodity currencies to continue their recovery, with the NZD breaking back above 0.6300, while the AUD consolidates above 0.6750. Markets are operating in very thin trade in this holiday period, before 2022 expires, looking to finish on a high?