Daily Market Commentary 9th February 2023

US Equity markets rallied strongly after the Federal Reserve Chairman Powell’s speech confirming the ‘disinflation process’ had begun, ignoring the qualifications. Powell had reiterated that rates would go higher and that the process ‘would be a long one’, even suggesting rates may go higher than previously estimated 5-5.25%. The hawkish tone maintained by Powell has been constant and unrelenting, but the equity markets choose to ignore the certainty of purpose. US Bond Yields are not though, creeping ever higher, so it appears this inflation crises is far from over. The recent rally in the US Dollar was consolidating, with the EUR trading around 1.0700, while the GBP bounced off 1.2000.

The Reserve Bank of India raised rates 25 basis points to 6.25%, following the RBA moves earlier in the week, confirming inflationary pressures remain a threat globally. Commodity currencies stabilised, following recent downside pressure, due to the rally in the reserve. The AUD held above 0.6900, ahead of the release of the latest RBA minutes, while the NZD looks to regain 0.6300.