US equity markets rebounded overnight, as fears over the pandemic settled and growth prospects look strong. The economic recovery is well under way and the inflation worries are being overlooked. The US 10 year bond yields drifted back to 1.57% and the Dollar drifted lower. The EUR traded 1.2020, while the GBP moved to 1.3930, supported by stronger CPI, PPI and Retail Price growth. Inflation is there, but the metric for measuring is not completely transparent. A closer look at PPI shows big increases in input costs, which will translate into consumer prices and inflation.
Commodity currencies continued to show strength, with the NZD breaking above 0.7200, while the AUD hit 0.7750. Markets will look to the ECB rate decision tonight, which will leave rates unchanged and the monetary tap firmly open. The EU Budget and Debt/GDP ratios may present some interest to market analysts, but expectations of massive debt is built into the pie.