The ECB released their Financial Stability Report, warning that economic growth was now a greater threat to the EU, than inflation. This combined with rising Geo-Political tensions in the Ukraine was enough to dampen enthusiasm on equity markets. The EUR also dipped back to trade 1.0500, while the GBP was supported by stronger than expected inflation data. UK CPI spiked back to an annualised 2.3%, from a previous 1.7%, which was no surprise considering the fiscal path the Government has taken. The GBP traded around 1.2650, holding ground despite a rally in the reserve, as the pressure is now on the Bank of England to hold interest rates at elevated levels.
The rising US Dollar was enough to resume downward pressure on the commodity currencies, with the NZD crashing back below 0.5900, while the AUD surrendered 0.6500. The PBoC left rates unchanged, in their latest decision, while Japanese trade numbers were slightly better than expected. The weak Yen has spurred exports, while imports remain stagnant. The Bank of Japan are in line to further increase rates as inflationary pressures rise.
