US CPI met with expectations and rose 0.1% for March, but Core inflation continues to rise. Core Inflation was up to 5.6%, from 5.5%, showing inflation is persistent and stubborn. Markets greeted the news well, with bonds settled, equities on the rise and the US Dollar heading lower. This will encourage the Fed to end interest rate rises, at the next meeting, as indicated. The prospects of recession is building, thus the Fed would look to end, the inflationary cycle. This does not support a stronger US Dollar and the EUR shot up to 1.0990, while the GBP bounced back above 1.2450. The Bank of Canada joined the RBA and halted their string of interest rate rises, leaving rates at 4.5%. This is all good news for global markets except we have threats from the energy sector remain and the war still rages in Europe.
The softer reserve allowed commodity currencies to confront recent losses, with the AUD looking to regain 0.6700, while the NZD approaches 0.6200 once again. Interest rate differentials will impact the direction of currencies, with the Australian rates operating at a serious discount to the US. Japanese PPI remains stubbornly high, as market attention turns to the US PPI number out in the US tonight.