Markets closed out a very stressful week, with Dow losses the highest since March and the Fed raising rates for the first time in three years. The Middle East crisis is ‘morphing’, while oil spiked above US$106/barrel, but settled just below $100/barrel, at the close of trade Friday. The Fed confirmed inflation was a problem and raised rates, indicating more rises may follow. This did not impress POTUS, who wants rates closer to zero, avoiding massive servicing charges. Chairman Warsh is a ‘dove’, but not on the same level as the President, testing the President’s patience and his own independence. The volatile week saw the US Dollar rise as a safety play, with the EUR trading below 1.1500, while the GBP settle just below 1.3400.The rise in the reserve hit commodity currencies hard this week gone by, with the AUD closing the week trading around 0.7100, while the NZD struggles to hold above 0.5700. All eyes remain focused on developments in the Middle East and the downstream consequences. A relatively quiet global data release week coming, but expect fireworks to continue and markets to fluctuate.
