US equity markets experienced a relief rally, after being severely shaken by the dramatic and destructive US inflation number (6.2%pa) released during the week. The runaway inflation will only be aggravated by massive increases in fiscal spending, further supply chain disruptions and the burgeoning energy crises. Inflation can be looked upon as a sobering saviour of the monetary system. Central Banks have been reckless and negligent in the adoption of 'modern monetary theory' and inflation is a rude awakening for them, which will require a 'Paul Volcker' like renaissance. QE must not only be halted, but QT must be employed, while interest rates must rise sharply.
The University of Michigan Economic Sentiment report was at a 10 year low, reflecting the dire straights the US economy is in and in the coming week, further analysis of inflationary impacts will be considered. The US Dollar settled, closing out a strong week of rallies. The EUR traded 1.1440, while the GBP rebounded, to trade back above 1.3400.
Commodity currencies have been severely battered by the surging reserve currency, but the relief rally stabilised their inclement descent. The AUD recovered to trade back above 0.7300, while the NZD rebounded strongly off the lows of 0.7000. The coming week will focus on growth and trade with various global CPI/PPI data releases.
Daily Market Calendar
15/11 NZ Services PSI, Japan GDP, China House Price Index/Industrial Production/Retail Sales/Employment, Japan Industrial Production, EU Trade
16/11 RBA Minutes, Japan Employment, France CPI, EU GDP/Employment, US Retail Sales
17/11 US Industrial/Manufacturing Production, NAHB House Market Index, NZ PPI, Japan Trade Exports/Imports, UK CPI/PPI, EU CPI, US Weekly Mortgage Applications, US Building Permits/Housing Starts
18/11 US Weekly Jobless Claims, Philly Fed Manufacturing Index
19/11 Kansas City Fed Manufacturing Index, Japan CPI, UK Consumer Confidence, NZ Credit Card Spending, German PPI, UK Retail Sales, EU Current Account
PLEASE NOTE THE VIEWS EXPRESSED IN THIS COMMENTARY ARE THOSE OF THE AUTHOR AND NOT COLLINSON & CO
Paul Bettany
Collinson Forex
Collinson & Co
Mobile 0406-744-923
paul@collinsonfx.com