The Federal Reserve Chairman Waller confirmed his dovish reputation, citing an improving inflation trend and a likelihood of a ‘rate hold’ at the next FOMC meeting. This was enough to send global bond yields tumbling, along with the US Dollar, while US equities soared. The EUR blew through 1.1600, while the GBP regained 1.3500. The biggest gains were in the Japanese Yen, which shot above 155.50, with rumours of continued coordinated Japanese/US intervention and the currency and bond markets. EU PPI spiked, following recent inflationary pressures from the energy crisis, which confirms massive inflationary problems remain.
The reserve jumped and allowed some gains in commodity currencies, with the AUD pushing above 0.7200, while the NZD looks to regain 0.5900. Australian trade numbers were bleak, with falls in both exports and imports, reflecting the added pressure of imported energy price rises and local demand withering. The NZ Q2 Terms of Trade deficit surged to 9%, well above expectations and also reflecting the cost of energy crisis.
