The US Dollar gained ground ahead of key inflation data, set to be released tonight. Markets are expected a slight rise in US inflation, as has been the case in Europe, perhaps encouraging the Fed to slow the rate of interest rate cuts. Equity markets and bonds were flat, ahead of the release of key data, while German inflation remained static, at 2.2%p.a.. The EUR retreated back to 1.0500, while the GBP drifted back towards 1.2700.The RBA left rates unchanged, as expected, citing persistent inflationary pressures forcing elevated interest rates to remain for longer. The RBA is copping a lot of public heat for their monetary policy, but it is the Governments fiscal policy, that is driving inflation. Chinese trade data was weaker than expected, although experts remain relatively strong. The news was not good for the commodity currencies and the NZD fell below 0.5800, while the AUD dropped to 0.6370, despite the RBA decision to hold interest rates. All eyes are on the US inflation number set to be released tonight.
