Asian shares were ending a rough quarter in a sombre mood. Amid fears central banks’ cure for inflation will end up sickening the global economy. It is proving to be a fillip for the safe-haven dollar and government bonds. As policymakers reiterated their commitment to controlling inflation no matter what pain it caused. Data on U.S. core prices later in the session should only underline the extent of the challenge.
Inflation can be sticky,” warned analysts at ANZ. “It is broadening from goods to services and wage growth is accelerating. That suggests it is too early to pick a peak for interest rates or a bottom for stocks. Even as though markets have already fallen a long way.
The Fed’s hawkishness has combined with an investor desire for liquidity in difficult times and gifted the U.S. dollar its best quarter since late 2016. The dollar index was trading up at 105.100 and just a whisker from its recent two-decade peak of 105.79.
The euro was struggling at $1.0452 , having shed 5.6% for the quarter so far, though it remains just above the May trough of $1.0348. It also dropped to a fresh 7-1/2-year low versus the Swiss franc at 0.99663 francs. Rising interest rates and a high dollar have not been good for non-yielding gold. Which was stuck at $1,816 an ounce having lost 6% for the quarter.
Oil prices were flat amid concerns about an unseasonable slowdown in U.S. gasoline demand, even as global supplies remain tight. OPEC and OPEC+ end meetings with little expectation they will be able to pump much more oil despite U.S. pressure to expand quotas. September Brent rose 17 cents to $112.62 a barrel, while U.S. crude added 7 cents to $109.85.