Powell’s comments at the Jackson Hole Symposium surprised markets when he gave his view that the Federal Reserve would continue to raise interest rates until they were satisfied that inflation was back under wraps. His comments disappointed analysts who had factored in inflation had peaked and the Fed would shift policy to a less aggressive stance. This spurred a negative reaction sending risk currencies and equity indices lower. The New Zealand Dollar (NZD) dropped to 0.6100 against the US Dollar (USD) as indices fell over 4%. The DOW gave back 1000 points in what was the biggest one decline since May this year and the US Dollar Index pushed to a fresh 2002 high as investors left the building. Traders are split as to a 50-point rise by the Fed in September 40% chance and a bigger rise at 60%, either way the Fed will drive up interest rates until they are satisfied inflation has reached its peak. On the docket this week is Non-Farm Payroll and unemployment figures. If the jobs number for August comes in worse than 295k we expect the NZD to drop.
Current Level: 0.6158
Last Weeks Range: 0.6154-0.6250