Federal Reserve Chairman Warsh made his debut at Jackson Hole, highlighting the Fed’s role in keeping inflation under control. He confirmed that PCE and CPI inflation readings were ‘better than expected’ but the underlying trends were not ‘meaningfully improved’. Markets took this as an intention to raise rates in the near future and bond yields jumped, along with the US Dollar. The EUR fell sharply, to trade below 1.1600, while the GBP crashed to 1.3530. Warsh is no rate hawk and will be inclined to keep rates as low as possible.Commodity currencies were not immune to the rising reserve, with the AUD tumbling back towards 0.7150, while the NZD slumped to 0.5900. This coming week sees an avalanche of global economic data, including important GDP readings in Australia, while the RBNZ are expected to raise rates.
