The Fed, under the new Warsh leadership, left interest rates unchanged. The presentation has changed, as has the semantics, which will reflect a complete overhaul of the Fed and their ‘raison d’etre’. Warsh carries the promise of an overhaul of the Fed and this may be the first public step, as behind-the-scenes, change is here . US Retail Sales were stronger than expected in May, showing the resilience of consumer demand, while the Fed news will be welcomed. The US Dollar jumped, with the EUR retreating to 1.1480, while the GBP slipped back to 1.3275.The rising reserve was enough to rumble commodity currencies, the AUD falling back to 0.7000, while the NZD surrendered 0.5800. The NZ Current Account remained in deep deficit, baked into negative territory, with a surplus not seen in more than 50 years! This adds long-term pressure to the economy, needing capital investment from offshore to survive, selling of domestic assets and borrowing.
