Equity markets closed out a positive week of gains, despite the raging war in the Ukraine and raging inflation ripping through Western economies. The Fed Chairman Powell has finally heeded the dire warnings of inflation, that has been here for more than a year, deciding to act to rein in spiralling CPI/PPI. He has warned he will go to 50 basis points rises each month, surging interest rates, in a belated attempt to combat the crises. The cat is out of the bag and the sanctions are only aggravating the situation, in terms of price and supply.
US Bond Yields have surged and the US Dollar has gained some support, from the rising rates. The EUR has crashed to below 1.1000, while the Yen has collapsed, to trade above 122.50. Commodity currencies have been major beneficiaries of the dramatic rise in commodity prices, directly as a result of the sanctions imposed upon Russia and the corresponding fall-out. The associated currencies have survived the storm, with the AUD rising above 0.7500, while the NZD looks to hold above 0.6950.
The coming week will be determined by the progress of the Ukraine situation and the impact on Western economies. Watch inflation and growth data closely, as this will drive bonds, currencies, equities and commodities. One thing is certain and that is that volatility will continue.