European and US equity markets rebounded overnight, as risk sentiment improved, following the inflationary fears. US Weekly Jobless claims were the lowest in more than a year, which settled markets, after the last shocking Non Farm Payrolls number. The FOMC minutes had raised fears of QE ‘tapering’, which had added to market malaise, but this was shaken off by markets overnight. German PPI was up to 5.2% p.a., which was inline with expectations, allowing some calm over inflationary prospects. The EUR regained 1.2200, while the GBP pushed back to 1.4180, reflecting market sentiment.
The Japanese Tankan report revealed improved manufacturing and services industry conditions, pointing to an export lead economic recovery. The Australian employment numbers were not as strong as expected, but the headline Unemployment number did fall to 5.5%. These measures of employment remain flawed, at best, but must be taken in the context of comparative chronology. The commodity currencies received some respite from a weaker reserve, with the AUD trading above 0.7750, while the NZD pushed up to 0.7190. Markets will look at global PMI data for direction