Markets closed out January on a positive note, following heavy losses on equity markets during the month January, sparked by the promise of higher interest rates and an end to QE. Asian markets were quiet, as this week is the lunar New Year and Chinese tend to celebrate for much of the week. Markets rallied in Europe ahead of important Central Bank rate decisions, with the Bank of England likely to continue to raise interest rates, while the ECB are likely to hold. The GBP rallied back to 1.3470, while the EUR regained 1.1200, with the EU posting a GDP number of 4.6% annually.
Commodity currencies rebounded, with the AUD pushing back to 0.7060, while the NZD bounced off 0.6550. The softer reserve allowed some gains but the narrative supports a stronger US Dollar and rising interest rates. The markets will concentrate on inflation and growth. The Central Banks actions later in the week will come into focus, while the US Non Farm Payrolls, will provide direction.