Global equity markets closed the week badly, with substantial losses all week, due to fears of recession. On Friday the PPI release was higher than expected, coming in at 7.4%, which hurts the narrative of falling inflation and the Fed’s options. This coming week will measure inflation in Europe and the USA, which was expected to soften, as energy prices plunge. if this does no eventuate, then the Fed may continue to raise rates aggressively, smashing the ‘peak-inflation’ narrative. The Bank of England and the ECB also meet to determine monetary policy and are expected to follow the Federal Reserve. The EUR will open the week above 1.0500, while the GBP holds above 1.2250, ahead of an avalanche of data releases.
Commodity currencies continue to benefit the softer reserve, with the AUD approaching 0.6800, while the NZD looks to regain 0.6400. Markets will be keenly focused on global inflation and speculate over the actions of the major Reserve Banks.