European and US equity markets opened the week mostly lower, as attention is focused on Central Bank rate decisions. The Fed is set to lead out with a 25 basis point rises, while the Bank of England and ECB are expected to raise rates by 50 basis points. Inflation is considered to have peaked in these economic zones, although Central banks are expected to continue to tighten monetary policy until inflation is back to acceptable levels. Economic data continues to remain negative, with the Dallas Fed Manufacturing Index holding in negative territory, while European growth begins to disappear. Swedish GDP numbers slumped into contraction territory, while German GDP also dipped into the negative zone. EU Consumer Confidence remains battered, while Italian PPI remains stubbornly high. The EUR drifted back to 1.0850, while the GBP fell back to 1.2350, both anticipating rate rises.
Commodity currencies were also softer, with the NZD drifting below 0.6480, while the AUD fell back to 0.7070. The NZ Trade deficit improved slightly, but mainly due to lower imports, rather than a stronger trade position. Markets will be heavily focused on the Central Bank actions, this coming week, but also monitoring growth and inflation. German and French CPI numbers come out tomorrow, while the week will close with attention turning to US Non-Farm Payrolls.