The market anxiously awaits the results of the two day FOMC meeting. Expectations are high, that the Fed will maintain the status quo and QE Infinity will remain in place. The Fed Chair is expected to brush off record inflation as ‘transitory’. The US PPI jumped to all time record highs, rising 0.8% to an annualised 6.6%, which will translate directly into consumer prices. US Retail Sales surprisingly contracted 1.3%, while Empire State Manufacturing slowed, reflecting warning signals from the economic data.
The UK decided to extend lock-down restrictions and this hit the GBP hard, falling to 1.4080, while the EUR pushed up to 1.2120. The RBA Minutes were steady as the Governor decided to hold the line. The RBA assured markets that QE would continue and did not for-see any inflationary problems until 2024. The AUD fell well below the 0.7700 mark, while the NZD headed back towards 0.7100.
All eyes remain on the Fed.