Markets closed out a quiet week of trading, on a positive note, with bond yields rebounding back upwards and the US Dollar firming. The Fed Chairman Powell spooked markets, and the prevailing narrative that we had reached ‘peak inflation’, therefore ‘peak interest rates’. Powell was not confident that the Central Bank had done enough to rein in inflation. This narrative may be ‘jawboning’, but may not, and could result in further rate rises. The rising US Dollar pushed the EUR back down to 1.0660, while the GBP slipped below 1.2200.
The rising reserve impacted the commodity currencies, with the AUD falling to 0.6340, while the NZD crashed below 0.5900. The RBA released their latest ‘Monetary Policy Statement’, which confirmed inflation would remain ‘higher for longer’ and will require further pain, in the form of interest rate rises. The Australian Government has embarked on a record high immigration level policy, boosting headline GDP, while fuelling the inflation fire. This coming week will be very focused on global inflation and growth, while watching developments on the Geo-Political scene, in Eastern Europe and the Middle East.
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