Equity markets turned sour overnight, while bond yields spiked higher, as Trump confirmed the blockade of the Strait of Hormuz would remain. The blockade would remain until there is a peace agreement, acceptable to both sides, thus confirming the energy crises will continue. The UAE formally confirmed it will leave OPEC, destabilising one of the most effective global cartels in the last 50 years and perhaps signalling big changes to come. The Fed left interest rates unchanged, in Chairman Powell’s last meeting as Chairman. Trump will be pleased to see his back. The US Dollar jumped higher, with the EUR slipping back below 1.1700, while the GBP surrendered 1.3500.
The rising reserve damaged commodity currencies, with the AUD plunging back towards 0.7100, while the NZD tumbled to 0.5820. Australian inflation data readings confirmed worst fears, exploding to an annualised 4.6%, hit by the ongoing energy rises and the flow on through the economy. The longevity of the Middle East crises, will determine the actions of the RBA, although another rate rise next week, will probably eventuate.
