The all-important US CPI number came in exactly in-line with expectations, falling 0.1% and down from 7.1% to 6.5%. This was confirmation of big falls in inflation and was exactly the boost markets needed to confirm the positive start to the year. European and US equity markets continued to rally strongly, US Bond Yields dipped lower, along with the US Dollar. The easing in inflation should ease the pressure on the Fed, with their interest rate rises being far more contained and manageable. The fall in the US Dollar allowed the EUR to surge up to 1.0840, while the GBP regained 1.2200.
Commodity currencies were also beneficiaries of the flagging reserve, with the AUD powering up to 0.6950, while the NZD looks to attack 0.6400. Economic data continues to remain weak, but softer inflation will allow Central Banks the privilege of slowing the pace of interest rate rises. The strong start to 2023 market trade looks likely to continue, as inflation remains contained and energy prices continue to return to normal.