The Fed Chairman Powell appeared before Congress overnight and reiterated their commitment to the war on inflation and also recognised the potential for a recession. The politics of a recession is bad, so being a political animal, will attempt to avoid this possibility at all costs. The Fed will show complete commitment to raising interest rates and attacking inflation, until it does not. Inflation is spiralling out of control and this is before the wage-price rises, really take hold. The Kansas City Manufacturing Index turned negative overnight, while US PMI data deteriorated markedly. The economic data is now reflecting the economic crises. The EUR slipped back towards 1.0500, while the GBP drifted to 1.2240, reflecting softer flash PMI data.
The AUD dipped below 0.6900, while the NZD fell back to 0.6250, as commodity prices came under increasing pressure. Australian PMI flash data was steady but the Australian economy is set to experience a round of big pay rises, across the economy, as the Union controlled Labor Government flex their political muscle. This will put Australian into a wage-price spiral, which will immediately feed the inflation crises.
Attention in the US tonight will turn to the University of Michigan Economic Sentiment report, which is already at record lows.