Markets had a quiet open, following the tumult of the previous record-breaking week of trade, fired up by the US Mid-Terms and the softer than expected US inflation number. The inflation data was much better than expected, leading to further speculation that the Fed may pause/pivot? Fed Chairman Powell has been certain and assured in his extremely hawkish monetary policy, which has left no room for doubt, in his conviction on the war on inflation. US Consumer Inflation rose to 5.9%, higher than expected, so markets need to be wary of speculation. The US held at lower levels, with the EUR trading 1.0340, while the Yen has surged to trade around 140.00.
The GBP has fallen back to 1.1740, following a slew of terrible economic reports and ahead of tomorrow’s CPI inflation report and the latest fiscal update from the Sunak Government. Market expectations are for widespread tax increases and budget cuts, following the Bank of England’s dour assessment of the UK economy. They have warned of a deep and extended recession, the likes of which, have not been seen since the 1950’s. It is hard to be bullish.
The weaker reserve allowed the AUD to trade around 0.6700, while the NZD edges back up towards 0.6100. Markets will follow the US PPI number, out tonight and local markets will keenly scan the RBA minutes, set to be released today.