Retail Sales in the US rebounded strongly, surging to 3.8%, confirming increasing consumer demand but also reflecting the impact of rampant inflation on headline prices. Oil prices surged once again, heading towards US$95/barrel, further aggravating inflationary pressures and confirming the energy crises. US Manufacturing and Industrial Production both improved, while Weekly Mortgages contracted, for yet another month. Markets keenly await the FOMC minutes today, which should show a hawkish position and a readiness to act on raising rates. The impact of Geo-Political issues on markets and if they were used as an excuse to delay raising interest rates, would not be treated kindly by markets. The US Dollar drifted, with the EUR bouncing to 1.1380, while the GBP headed towards 1.3600, after stronger than expected inflation numbers.
Chinese inflation was benign, as always and the PPI number came in at 9.1%, below expectations and the previous months. The reserve currency was softer and commodity prices regained some upward momentum, allowing the associated currencies to continue to recover. The NZD broke back above 0.6650, while the AUD heads towards 0.7200, supported by strong commodity prices.
Markets await the Fed’s minutes.