Non-Farm Payrolls beat expectations, adding 390,000 jobs to the US economy, ‘green-lighting’ the Fed in their aggressive interest rate rises. There was a school of thought that the weak-kneed Federal Reserve, would suspend their hawkish attack on runaway inflation, if the economy began to falter. US equities wiped out the previous gains, on Friday close, following the release of the employment data. Global share markets remain extremely vulnerable and volatile. Elon Musk has decided to freeze employment recruitment for Tesla and to cut 10% of the existing labour force, revealing his view of the economy. Musk has iterated that he has a “super-bad feeling” about the economy.
Services and Composite PMI data was softer in the US and Europe, while the flow-on from Chinese lock-downs, will be felt in the US supply chain. Europe is feeling the impact of their self-destructive economic war on Russia, as the self-imposed sanctions force huge cost increases in energy and food, destroying citizens standard-of-living. Inflation in the EU hit 8.1% and the ECB is yet to act, to combat this destructive economic cancer, but the question will be asked again in the coming week. The ECB will meet to determine monetary policy and the question will be, ‘will they act to cut QE and raise interest rates or will they continue to obfuscate’? The RBA will also meet this coming week and announce monetary policy. They will raise rates, with the question being, ‘by how much’? The EUR trades around 1.0700, but this may change following the ECB meeting, while the GBP drifted below 1.2500.
The RBA meeting will announce a hawkish stance on monetary policy, now a new Labor Government has been sworn in. Heroic Central Bank/Treasury economic forecasts will be reassessed in the cold light of dawn and the incoming Government will face serious economic realities. The energy crises has hit Australia, as global gas and oil prices spiral, while promised green policies will only antagonise and herald a full-blown energy crises. The AUD will open the week trading around 0.7200 and will be impacted by the RBA meeting on Tuesday, while the NZD trades around 0.6500.