The Japanese Tankan report came in virtually unchanged, showing manufacturing pretty steady across all the regions, allowing a steady start to the week in Asia. Europe opened much weaker, as fears over the political restrictions for the latest version of the virus, began to impact markets. The latest restrictions, including vaccine passports, mandates and lockdowns do nothing for the economy. The US CPI number was the worst in nearly 40 years and this may play out in the Fed’s meeting this week, followed by the Bank of England and the ECB. Equities turned lower and the USD firmed, with the EUR testing 1.1300 again , while the GBP slipped to 1.3220.
Commodity currencies were once again impacted by demand questions, with the NZD falling back to 0.6750, while the AUD dropped to 0.7115. All eyes remain on the Federal Reserve and their reaction to the record inflation rate driving cost-of-living pressures and prices.