Inflation dominated markets again overnight, with the UK CPI number more than doubling, from 0.7 to 1.5%! These numbers are kryptonite to markets, as any threat to the lifeline of liquidity, would be devastating. European and US equities plunged on the news. US markets began to recover, but the release of the Fed minutes, resumed the downward spiral in stocks. The Fed minutes revealed that QE tapering may be on the cards, in future meetings, as the economic recovery continues. The threat to a highly leveraged markets and asset bubbles, across the classes, is huge!
To add to the mayhem, cryptocurrencies have suffered massive sell-offs, perhaps triggered by warnings from China regarding the use of cryptocurrencies. To add to the misery PPI numbers in the UK were also worrisome, with rises of nearly 10% for the year! The US Dollar bounced, with the EUR retracing to 1.2170, while the GBP fell to 1.4110 despite the CPI number shock.
The rising reserve and market instability sent commodity currencies lower, with the AUD falling to 0.7720, while the NZD plunged to 0.7150. NZ PPI was markedly higher, although rises were not in the same league as the UK, while Australian Consumer Confidence slipped. The global sell-off in equities will dominate local market trading, although the Australian Employment numbers may influence domestic trade.