Morning Brief – Australia

Australia

With a 25 bp increase in interest rates, the Reserve Bank of Australia took interest rates to an 11 year high of 4.1% and with that increase took the total increase since May 2022 to 4% which is the most aggressive rate tightening cycle ever. This was not expected and consequently had a disproportionate effect in the market. Not content with that, the language from the central bank suggested further rises were on the cards in the fight to crush inflation. The Aussie dollar strengthened by 1%.

GBP/AUD 1.8630.

Japan

Recent moves by the Federal Reserve in raising interest rates and its language have served to strengthen USD. Yet again with USD/JPY trading around 140 talk has turned to pondering whether the Bank of Japan will intervene and at what level to reverse the move from 130 to where we stand now. Most expect intervention to be deployed first when/if the rate reaches 145 and then if necessary if JPY weakens towards 150 as it did in 2022. Meanwhile few market participants expect the JPY to strengthen much in the light of the BoJ’s low interest rate policy.

USD/JPY 139.85.

UK Interest Rates

In case you are getting dulled with pain on this one and have lost sight of what is next in store, the expectation is that the Bank of England will raise interest rates on June 22 to 4.75% and that rates will reach 5.5% later in the year. More positively ahead of the summer holidays GBP is firm against the EUR: GBP/EUR 1.1610.

Easyjet

Right up there with capturing the current zeitgeist for woke name badges is Easyjet, which is now including the pronouns by which their staff and aircrew identify on their name tags. It is all part of creating an inclusive environment where everyone can feel “comfortable.” Except for the customers of Easyjet of course who will end up paying for this inclusivity on top of the earlier indignity of Easyjet already advising their staff to no longer address passengers as Ladies and Gentlemen when saying good morning/afternoon/night.

Blind Faith

One of rock’s so called supergroups, Blind Faith comprised Steve Winwood, Eric Clapton, Ginger Baker and Rick Gretch and this day in 1969 they played to a crowd of 120,000 in London’s Hyde Park which turned out to be their one and only live performance. Here is the best song from the band: Can’t Find My way Home:

Come down off your throne and leave your body alone
Somebody must change
You are the reason I’ve been waiting all these years
Somebody holds the key

Well, I’m near the end and I just ain’t got the time
And I’m wasted and I can’t find my way home

I can’t find my way home
But I can’t find my way home
But I can’t find my way home
But I can’t find my way home
Still I can’t find my way home
And I’ve done nothing wrong
But I can’t find my way home

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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