European markets were significantly lower overnight, due to fears over the new mutation of the virus and the economic impact it may have. EU PPI jumped to unprecedented levels, surging to nearly 22% on an annualised basis, screaming inflation to the ECB and all that will listen. US equity markets opened flat, but quickly shrugged off the negative sentiment enveloping European markets, for no apparent economic reason other than market confidence. The EUR traded lower, falling below 1.1300 once again, while the continues to trade below 1.3300.
Markets keenly await the Non Farm Payrolls number, with both the ADP and Challenger reports coming in positive. The NFP number is expected to be about 550,000 jobs added to the economy and any major aberration will likely have an impact, on where markets close out the week. The virus threats have not been good for commodity demand, thus pushing prices lower, with Oil trading way down around US$66/barrel. This has hit the associated currencies, with the AUD falling below 0.7100, while the NZD struggles to hold on to 0.6800.
The virus and Non Farm Payrolls, remain the ‘topic du jour’, although the elephant in the corner is definitely inflation.