US inflation tumbled, far more than was expected by markets, practically eliminating pressure on the Federal Reserve to raise rates. US CPI collapsed, from an annualised 4.2%, to 3.5% p.a.. This allowed bond yields to weaken, along with the US Dollar, while equities remained stable. The NFIB Small Business Optimism gauge, showed a marked improvement, reflecting growing market confidence. The Middle East crises has been seen as ‘not so great a problem’, as the boy has cried wolf, far too often. The EUR regained some momentum, rising back above 1.1400, while the GBP pushed back towards 1.3400.The softer reserve allowed some recovery in the commodity currencies, with the AUD heading back to 0.7000, while the NZD regained 0.5800. NZ Business Confidence data jumped, while both Australian Consumer and Business confidence showed some improvement. Chinese trade data was strong with huge increases in both exports and imports.
