After reaching almost $0.7190 in the middle of last week, the Australian dollar was sold slightly to $0.6980 ahead of the weekend.
The Middle East War dominates the investment climate. The inflationary implications are first-order considerations, and there has been a large swing in expectations of central bank policy this year. Japan is a notable exception as the swaps
Marc Chandler has been covering the global capital markets in one fashion or another for 40 years, working at economic consulting firms and global investment banks. A prolific writer and speaker he appears regularly on CNBC and has spoken for the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009 Chandler was named a Business Visionary by Forbes. Marc's commentary can be found at his blog (www.marctomarket.com) and twitter www.twitter.com/marcmakingsense
The war has triggered a flight to safety, strengthening the US dollar and shifting G10 rate expectations from cuts to hawkish holds, with only Australia seen as a potential hiker.
The Fed is expected to hold rates steady, balancing inflationary pressures from energy shocks against slowing growth, while financial sector strains -- especially in private credit -- warrant close monitoring.
Energy-driven yield spikes have weakened the euro and sterling, prompting markets to move from expecting rate cuts to pricing in possible hikes, despite economic softness and poor price action.
