The US Dollar haemorrhage has been temporarily stemmed, as capital flows to the safety of the US Dollar, as war threatens once again in the Middle East. The US has positioned a huge naval armada, within range of Iran and warned them to come to a nuclear deal or pay the military price. Markets also await the FOMC Interest rate decision, but there has been little action in the lead up to the announcement, as the Fed is expected to hold rates unchanged. The EUR retreated from 1.2000, back to 1.1930, while the GBP traded back to 1.3770.The Japanese Yen has stabilised, for now, as the ‘carry trade’ unwinds and the selling of US Treasuries gathers speed. US Bond Yields jumped, Japanese Bond Yields stabilised, as did the Yen. The softer reserve allowed the AUD to take breather, retreating from 0.7000, while the NZD consolidates above 0.6000. Australian CPI inflation in Q4 spiked sharply, jumping to an annualised 3.8%, ensuring that further rate cuts will be some time in the future.
