US equity markets continued to recover, ahead of the appearance of Federal Reserve Chairman Jerome Powell, before the House of Representatives. He will note the impact of the pandemic, the vaccine and the economic recovery. He will also note the rise of inflation and tag it ‘transitory’. Time will tell, but failure to act and to address the growing problem, will allow the horse to bolt out of the stable and off into the big blue beyond.
EU Consumer Confidence remained negative, while US Existing Homes Sales contracted, so mixed messages are coming from economic recoveries across the world. The US Dollar continued to lose ground, with the EUR rising to 1.1930, while the GBP traded up to 1.3930.
Commodity currencies regained some ground with the softer reserve, as the AUD crept back to 0.7550, while the NZD surged back through 0.7000. The Federal reserve Chair is arguing that inflation is temporary, but he is caught between the rock and a hard place. They must raise interest rates now and cull QE, but they cannot, as public/private debt servicing becomes a crippling issue.