Daily Market Commentary 23rd March 2022

Federal Reserve Chairman Powell sounded the alarm bells again over the inflation crises in the US economy, warning that the Fed is prepared to raise rates at an even faster rate, than previously indicated. The Fed Chairman has realised the extent of the inflation crises and is now considering raising rates by 50 basis points, in the coming meetings. This is completely appropriate, but without the dismissal of QE, ineffective. The Fed must actively cut QE and contract the bloated Fed balance sheet. The warning signals were not heeded by equity markets, which resumed their upward surge, continuing on from last weeks rally. The USD gained some ground, with the Yen crashing to 120.80, while the EUR drifted to 1.1020.

Commodity currencies remain well bid, due to the surge in prices, while the NZD is benefitting the support of higher interest rates. The NZD zoomed up to trade 0.6950, despite weaker consumer confidence data, while the AUD surged back through 0.7400.

Look for further inflationary data and the latest from the ECB meeting to influence markets.