US equity markets surged overnight, ignoring the Middle East and instead focusing on the earnings season. ‘Beats’ in corporate earnings is a positive sign and compliments improving economic data. Inflation remains yesterday’s news, to markets, but it could be tomorrows too. The Middle East crisis escalates and extends, while oil prices are on the rise, blasting through US$85/barrel. The security of the US Dollar has been sought, with the GBP falling below 1.3400, while the EUR tests the downside of 1.1400.Commodity currencies weathered the storm, with the AUD holding 0.7000, while the NZD initially improved to 0.5870. The release of the quarterly CPI data had boosted the KIWI during domestic trade, but the rising reserve pushed the NZD back to 0.5830. NZ inflation surged in Q2, spiking to 4.1%, from 3.1%. This would be almost catastrophic, if it was a monthly reading, but the RBNZ stubbornly and unusually only does quarterly readings. There will be more pressure on the NZ Central Bank to raise rates further.
