Daily Market Commentary 8th November 2023

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US equity markets continue to build on last week’s big gains, confident the Fed has reached ‘peak inflation and interest rates’. Inflation is coming down and much of it is the cooling of global demand, exemplified by big falls in Chinese Exports, while Oil prices are tumbling, despite the output restrictions. German Industrial Production contracted 1.4%, reflecting the dire state of the German manufacturing sector, hammered by massive energy price rises over the past 18 months. The US Dollar rallied despite softer bond yields, forcing the EUR back to 1.0650, while the GBP slipped to 1.2650.

The rise in the reserve pushed commodity currencies lower despite the RBA raising rates, with the AUD heading back towards 0.6400, while the NZD plunged back towards 0.5900. The RBA Governor took the opportunity to raise rates by 25 basis points, under cover of the Melbourne Cup, unable to ignore the stubbornly high inflation. Geo-Political issues remain a threat to markets, but appear temporarily contained, while market attention will turn to inflationary conditions in Europe.

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