US inflation data confirmed a rise, reversing the trend lower, that has encouraged the Fed to cut rates. The rise was in line with expectations, a small jump to 2.7%, from 2.6%. This follows cuts from the Fed and will probably not interrupt the process to make further cuts but does serve as a warning signal. The Bank of Canada slashed 50 basis points, cutting to 3.25%, striving to kick start a challenging economy. Central Bank attention now turns to the ECB and the Swiss National Bank, with both expected to cut 25 basis points. The ECB expectations allowed the EUR to fall back below 1.0500, while the GBP bounced off 1.2700.
The weakness of recent trade data globally has not aided the trade dependent commodity currencies. The NZD fell back to 0.5760 overnight, while the AUD fell below 0.6450, despite the RBA holding the line. The Japanese PPI moved higher, following recent rises in the CPI, which may encourage the Bank of Japan to buck the trend and raise rates. Local markets will look at Australian employment data and the Japanese Tankan report for direction.
