The Federal Reserve raised rates overnight, by 25 basis points, as signalled with more likely to come. The inflation wave, sweeping economies, was too hard to resist. Chairman Warsh acted in line with market expectations, and markets reacted accordingly. US Bond yields came off yesterday’s record highs, equity markets stabilised, as did the US Dollar. The EUR slipped below 1.1500, with the GBP also dipping, below 1.3400. Attention will now turn to the Middle East, once again, and the energy crisis and inflation.
Commodity currencies took a hit following the FOMC decision, with the AUD dropping below .7100, and the NZD looks to hold onto .5700. NZ Current account data, released yesterday, was slightly better than expected, although oceans of red continue. Local markets will be watching NZ GDP growth data, due for release later today.
