The Federal Reserve Chairman Powell appeared in front of the House of Representative and assured them that inflation was temporary and that these pressures would ‘resolve themselves’. If this was a CEO appearing before shareholders, I would think that they may wish for a better strategy than that perhaps? He continued on with the notion that inflation was ‘transitory’ and this settled markets. The US equity markets are trading around all time record highs and bond yields remain calm and tranquil, for now.
European PMI data boomed, as economies reopen, jumping to 15 year highs. This combined with the reassurances from the Fed, should have boosted market confidence, but equities remain challenged in Europe. The EUR traded around 1.1930, while the GBP pushed up to 1.3950, with strong PMI data despite the extended lock-down measures.
Commodity currencies are beneficiaries of the softer reserve, with the NZD consolidating above 0.7000, while the AUD pushed above 0.7550. Australian PMI was strong, but missed expectations and outbreaks of the virus in NSW will hurt confidence.