Themes

• General mood is “risk off”
• U.S. Inflation numbers destroy the USD
• Fed’s Brainard: Inflation is too high

What’s Moving

Markets were ultra-quiet in European and early U.S. trade before an as expected (but high) inflation report saw USD bulls sell the fact and thump the Dollar across most of the majors. U.S. December inflation printed as expected at +7.0%. This is now a 40 year high.

Stocks and commodities also rose slightly over the day, but for the first time in a long time, it was a currency led day.

Best gains were seen against the commodity currencies, while Sterling printed to a near three-month high.

Thoughts

After that sort of volatility overnight, we expect consolidation of the overnight movements in Asia today.

The local data calendar is light, with little more than Japanese Preliminary Machinery Orders on the docket.

Pivot Points