US equity markets rallied strongly, following inflation reports across Europe and the US. which were roughly in line with expectations. Inflation readings in France, Spain and the UK were flat, while many had expected an energy induced rise, while US inflation pushed up to 2.9%. This was broadly in line with expectations and was brushed off by markets, which saw bond yields and the US Dollar drift off recent highs. German GDP growth was negative and expected, but confirmed the deep and extended recession, Germany is now suffering. EU Industrial Production contracted 1.9%, which is directly related to the de-industrialising of the German economy. The relief rally of the EUR continued, rising back to 1.0280, while the GBP traded around 1.2200.The softer reserve allowed for a further recovery in the commodity currencies. The AUD regained 0.6200, while the NZD reclaimed 0.5600, following stronger than expected Business Confidence data. Important Employment and inflation data will be released today in Australia, which will influence local markets and the currency.
