Daily Market Commentary for 19th December 2022

Daily Market Calendar

Global markets closed a dramatic week, shaken by the relentless pursuit of inflation, by the Fed and renewed commitment of the ECB. Equities tumbled as Fed Chairman Powell showed his resolve on monetary policy and ECB Chair LeGarde, finally showed regard for the inflation crises engulfing Europe. The Fed, ECB, Bank of England and Swiss National Bank all raised rates by 50 basis points, seemingly coordinated. It was the narrative and resolve that shook equity markets. European bond yields rose and the EUR spiked, then settled back to close around 1.0600 on Friday. Inflation remains the key to market trade and this coming week will be no different. A close watch will be kept on CPI/PPI across the markets and the important PCE number in the USA.

The threat of European and US recession, continues to plague commodity demand and thus the associated currencies. The AUD crashed to trade below 0.6700, while the NZD slipped to 0.6350. GDP data continues to be strong in both Australia and New Zealand, but worrying trade and current account data points to imbalance, while inflation remains the real threat. This coming week may look closely at the Bank of Japan and their rate decision. The have been staunch up until now, keeping interest rates at record low levels and protecting the currency. Inflationary pressures are on the march in the land of the rising sun and this will test the resolve of the Bank of Japan.

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Thanks and Regards Paul Bettany 0406-744-923