Inflation remains the key driving indicator in markets and the surging CPI and PPI are confirming the problem, although the rate of the rise appears to be easing. The US CPI hit 7%, which is the highest rate in nearly 40 years, but the monthly rise was less than expected. The PPI number came in at 9.7%, which was also a lower than expected number for the month, suggesting that perhaps the supply chain issues may be easing the spiralling inflation and input cost growth. This allowed the surging US Bond Yields to pull back from 1.8% and the upward momentum for the Dollar was temporarily halted.
The GBP regained 1.3700, while the EUR pushed back above 1.1450, ahead of key growth numbers set to be released tonight. German and UK GDP growth numbers will elaborate on the state of the European economy and how badly it is being impacted by the Government restrictions to combat the virus. US Retail Sales are also set to be released tonight and this will reflect the confidence of the consumer. Commodity currencies continue to benefit demand pull and the softer reserve, with the NZD surging back above 0.6850, while the AUD approaches 0.7300.