German inflation remains contained, along with other recently released data from across Europe, while US inflation rose in line with expectations. The upward pressure remains on prices, due to elevated energy prices, and fiscal and monetary imbalance. The UK GDP growth number staggered into positive territory, barely, ending the technical recession. Industrial and Manufacturing Production remains in deep contraction mode and trade deficits are growing. The UK is in a mess, as a most EU economies. The German economy is in an extended and deep recession, as energy is forcing a de-industrialisation. The latest round of inflation reports across Europe and the US, have triggered a relief rally in equities, while bond yields have drifted off recent highs. US Retail Sales were positive, and the US economy is now at the mercy of the incoming Trump administration. Inauguration day is Monday the 20th of January and expect fireworks from day one. The lower US yields allowed the US Dollar to drift, with the EUR reaching 1.0300, while the GBP pushed t0 1.2250The softer reserve allowed the commodity currencies to stabilise, with the AUD holding 0.6200, while the NZD looks to consolidate above 0.5600. Australian Employment data showed a jump in the headline unemployment rate, from 3.9%, to 4%. The labour market may encourage the RBA to cut, but elevated inflation levels may act as a deterrent. Look for Chinese economic data to drive domestic markets today, with GDP, Industrial Production and Retail Sales all set to be released.
