The Chinese ‘covid-lockdowns’ weigh heavily on market sentiment, as social unrest rises, threatening supply chains and global recession. News from China is that the infection rates may have peaked and restrictions may be eased? European markets focused on inflation, which appears to have peaked, assisted by energy prices falling. Spain’s headline inflation rate fell to 6.8%, while Germany’s held at 10%, slightly off record highs. The easing of inflation is good news for global markets and reduces the pressure on Central Banks. The Federal Reserve Chairman Powell, is scheduled to make a speech tonight and this will be watched closely for hints of an easing in monetary policy. The EUR was slightly softer, trading 1.0330, while the GBP traded below 1.2000.
Commodity currencies remained steady, with the AUD trading below 0.6700, while the NZD dipped under 0.6200. Markets will continue to focus on inflation and growth, while keeping a close eye on the Fed Chair Powell and his perception of inflation, for the future impact on monetary policy.