Earnings season kicked off in a sparkling way, with Goldman Sachs blowing away expectations and leading the banking stocks higher, lifting the Dow to new record highs. The Fed Chairman Powell also noted that the Fed would be cutting the QE bond buying program before any interest rate hikes were considered. The RBNZ aped the Fed and left rates unchanged and QE firmly in place. The NZ Central bank reflected the Fed’s stance on inflation, considering the current inflationary pressures transitionary, therefore no reason to worry. NZ is heading into a double-dip recession and cost of living pressures are being felt hard, but statistical evidence of low Unemployment andlmuted Inflation tell a different story. The piper must be paid!?
EU Industrial Production contracted, but this failed to deter a surge in the EUR, pushing up to 1.1975. The commodity currencies were also major beneficiaries of a damaged reserve, with the NZD surging to 0.7130, while the AUD blew back through 0.7700. Commodity prices remain high, along with many asset classes and Australian Consumer Confidence surged to new highs. Monetary and fiscal policy have combined to stimulate markets but the much denied inflation is there to ring the bells of caution.