US equities turned negative overnight, after surging towards previous record highs in the previous session, boosted by stronger than expected Retail Sales. Weekly Mortgage Applications contracted 2.8%, hinting at further weakness in the Labour markets, while inflation remains the underlying market narrative debasing the share market rally. UK CPI came in at 4.2%pa, while PPI hit an annualised 13%, all but ensuring the Bank of England will be forced to act on monetary policy, tightening QE and raising interest rates. The GBP rallied back towards 1.3500, while the EUR traded just above 1.1300, with their own inflationary problems, with CPI inflation hitting 4.1%.
Australian wage growth was weaker than expected, allowing the AUD to fall back to 0.7270, while the NZD is battling below the Big figure of 0.7000. The Australian labour market remains severely challenged and this has eased the inflationary pressures on the RBA, allowing them to hold rates at historical lows. The market focus remains inflation and growth.