Markets traded the huge, blow-out Non-Farm Payrolls report, to open the new week. It was a stellar number and doubled expectations, which is a positive for the US economy, but was a ‘green-light’ to the Fed to continue aggressively raising rates, in an attempt to step on the runaway inflation. The Fed will attempt to ‘thread the needle’ and attack inflation, which they hope has peaked? The CPI number will be released Wednesday and is expected to fall from the record high of 9.1%, to 8.7%. The major concern is that the underlying factors driving inflation remain the same, or perhaps worse. The US Government just passed yet another spending bill, up to USD$750 Billion, which will be funded by further debt and the Fed. This is the primary cause of the inflation crises, deficit spending funded by the Fed printing money. Ironically, the Bill is call the ‘Inflation Reduction Act’!
The US Dollar was softer overnight allowing the EUR to regain 1.0200, while the GBP pushed up towards 1.2100. European markets will focus on the German CPI number to be released Wednesday, just prior to the all important US CPI number. Australian Business and Consumer Confidence measures will be released during domestic trade, while NZ Credit Card spending will gauge the Consumers health. The AUD is looking to regain 0.7000, while the NZD is once again approaching 0.6300.