Themes

• General mood is “risk off”
• USD again weaker overnight, shadowing the weakness in U.S. interest rates
• CNBC: Fed’s Harker: Action on inflation is required

What’s Moving

Despite Wednesday’s higher U.S. CPI and the overnight higher than expected PPI numbers (9.7%) U.S. interest rates dipped slightly. This saw continued selling of USD against most of the majors, as currency players decided the best action was the shadow debt markets. Best gains were in the JPY and the CHF, while commodity currencies lagged on the day.

Sterling saw gains overnight (mainly in line with USD weakness) despite increasing talk that PM Johnson will be asked to step down amid his flaunting of Covid lock down rules.

Thoughts

We are expecting another session consolidating overnight movements in Asia today, with little on the data calendar and ahead of U.S. Retail Sales numbers tonight. The only data release of note today is the Chinese Trade Balance (E: 454bln).

Pivot Points