Central bankers on inflation

Good morning

Feds Powell mentioned inflation yesterday, noting it was coming in higher than expected but still didn’t seem too fazed by it, particularly as the largest gains came from goods and services impacted by Covid. He said tapering will continue to be discussed but still sees that as some way off and played down talk of tapering. US yields are lower and the dollar has lost some of the gains it made after the CPI release a couple of days ago. Powell speaks again later today.

BoEs Bailey made similar noises yesterday although was a little more hawkish in my opinion, saying inflation was higher than expected and he’s waiting to see whether it is transitory or not. They are watching closely. UK employment data a touch weaker than expected today with the unemployment rate at 4.8%, just a bit higher than the 4.7% expected. GBP did rally but GBPUSD once again failed as it approached 1.3900, as I type it is testing short term support at 1.3820.

BoC yesterday kept its rates unchanged but did reduce asset purchases to CAD 23bio/week and raised 2022 and 2023 growth forecasts. USDCAD responded accordingly, trading down to 1.2430 or so initially before rallying sharply beyond pre-announcement levels. Now 1.2540.

Some reasonable China data overnight gave China shares a boost as the fears of a slowdown may be reduced. Other Asian markets generally lower with Nikkei down over 1%.

BoJ rate meeting due overnight, no policy changes expected though. Biden and Merkel have a joint press conference later, unlikely to affect markets.

- 13.30 US philly fed survey, initial jobless claims

- 14.15 US industrial production

- 14.30 Feds Powell speaks

- 21.15 Biden/Merkel speak

- 23.30 NZ business PMI

- 23.45 NZ CPI

- 04.00 BoJ rate announcement

- 07.00 BoJ press conference