US equity markets trimmed recent gains overnight, following the stronger than expected Non-Farm Payroll number and ahead of today's CPI inflation reading. The US labour market is stronger than expected and the inflation reading is expected to remain steady, easing pressure on the Fed to cut rates. This did not aid equity markets, but the change of leadership at the Fed, will ensure a looser monetary policy in the near future. The US housing market is having a realignment and may be a space to watch, as a leading indicator, in the months ahead. The US Dollar regained some mojo, with the EUR retreating to 1.1860, while the GBP fell below 1.3650.
The ‘Takaichi Trade’ gained momentum in Japan, as markets greet the certainty of Government policy, following the landslide supermajority victory of Takaichi. Economic policy is expected to be more nationalistic, with no real opposition, however the underlying problems that led to crises before the election remain. The rising reserve allowed the AUD to drift back to 0.7100, while the NZD slipped below 0.6050. The RBNZ Inflation report, set to be released this morning, may confirm hotter than expected inflation adding upward pressure to bond yields and the NZD.
