Market stabilised Friday, following a volatile week of losses, sparked by fears over a global trade war. The Federal Reserve Chairman has adopted a ‘wait and see’ approach to monetary policy, until the full extent of the Trump administrations tariff policy, is fully vented. Markets are not keen on tariffs and cite short-term growth prospects and inflation. The Fed’s Beige Book, noted the higher input costs to the US economy, could impact both inflation and growth. The German answer is to massively increase deficit and debt spending on arms manufacturing, to extend the war in the Ukraine. Mindless policy from mindless Politicians. The expansion of monetary and fiscal policy in Germany increased bond yields and boosted the EUR, which consolidated above 1.0800, while the GBP held 1.2900.International trade wars did nothing for commodity prices and the associated currencies, with the AUD falling back below 0.6300, while the NZD slipped under 0.5700. This coming week will focus on international trade, growth and inflation. The Bank of Canada is likely to follow the ECB and cuts 25 basis points, in an effort to stimulate a deeply recessed economy. Canada is under great pressure, as they are majorly dependent on US Trade, while tariffs will send the economy off a cliff.
