‘Some pain’ ahead, that is the warning from Jay Powel’s address to the Jackson Hole symposium. That is one way of looking at, another way is that rate rises are far from over, and that an overtighten situation is more than likely as inflation ‘will remain about target for a considerable period of time’.

This, as one would expect, blew a hole in equity markets, sinking anything with risk exposure. What pushed markets even harder, Powell took this comment further by stating that it would be premature to be loosening policy in the near future (as in anytime in 2023) and stressed that the main overarching focus was fighting inflation. Considering US inflation is 6.5% above the board’s 2% policy handle level, restrictive policy will be needed for some time, and that is likely to require a persistent period of below-trend growth.

This is where the pain comment was slipped in warning that the below trend growth will bring pain to households and businesses. But that the alternative of failing to restore price stability would have an even greater level of pain.

The Jackson Hole of 2022 will be remembered for the hole it left in markets and the signalling of a possible recession in the year to come.

From an FX perspective all flows were to safe-havens and in particular the USD. The all-conquering DXY continues to smash all before it.

EUR/USD briefly rose back above parity on speculation the ECB will increase rates by 75 basis point to $1.0090 however Powell’s comments quash this and the pair fell back below $0.9960.

GBP/USD slid to $1.1735 there is no signs Cable is going to easy up. This is a pair that started 2022 at $1.35

USD/JPY is up another leap to ¥137.65, that’s 115 pips on Friday morning.

AUD/USD fell from a full cent to $0.6885 as all things risk are shed.