A tumultuous week in Geo-Politics caused markets to rock’n’roll. The Davos WEF Forum was one for the ages, where the USA threatened their NATO allies with tariffs, or worse, if they did not accede to the transfer of Greenland sovereignty. In an unprecedented agreement, both Denmark and Greenland were sidelined, and an agreement was made over Greenland, with US dominated NATO. This violation of a NATO allies' sovereignty threatens the very institution. It did however calm markets and the US dollar eased further, allowing the EUR to approach 1.1800, while the GBP regain 1.3600.
The weaker reserve and inflation data combined to send commodity currencies surging. NZ Q4 inflation data was hotter than expected, coming in at 3.1%, suggesting the RBNZ will not be easing monetary policy, any time soon. The NZD rallied strongly on the news, blasting though 0.5900, while the AUD looks to regain 0.6900. The focus, this coming week, will be the Federal Reserve latest interest rate decision.
