Markets closed out the week flat, with the US Dollar attempting to regain some lost ground, but failing miserably. The EUR headed back towards 1.1400, while the GBP approaches 1.3500, on the back of strong UK Retail Sales. US PMI data, was slightly better than expected, and contradicts recent weak economic data. The coming week will look closely at GDP growth and inflation, in Japan the USA and Europe. The culmination of the trading week is the important US PCE inflation indicator, released late in the week. The Fed is determined to hold rates ‘higher for longer’ and will use any rise in inflation, as an excuse to hold at these elevated levels. The Fed is on a crash course with the Trump administration.The USD weakness allowed the AUD to recover losses, following the RBA interest rate cuts, earlier in the week. The AUD regained 0.6450, by the end of the week, while the NZD builds on 0.5900. This coming week, will see the RBNZ make their latest interest rate decision, and are expected to cut rates by a further 25 basis points. Recent rises in NZ inflation indicators may offer some caution.
