Global equities continued to tumble into the new week, following the Non-Farm Payrolls release last Friday. The strong labour market has ‘green-lighted’ the Federal Reserve’s strategy to make war on inflation, through raising interest rates in meg-chunks of 75 basis points. Europe is amidst a major energy crises and plunging into a deep recession, with no off-ramp. Fiscal recklessness over the last 20 years is taking it’s toll and accommodative monetary policy has hatched the inflation nightmare. The EUR crashed back below 0.9700, while the GBP fell to 1.1020.
The soaring reserve and the RBA’s surprisingly ‘dovish’ monetary policy strategy is driving the AUD to new lows, falling to 0.6250, while the NZD crumbled to trade 0.5550. Today is Columbus Day in the USA and explains the thin market trade, but things will heat up again tonight. Inflation and growth remain key drivers of markets, in the coming week.