The USD lost ground against both GBP and the EUR yesterday as the equity bear push lower ran out of steam with bargain hunters moving back into the market. This also confirms that the inverse correlation between the dollar and risk appetite is still alive and well and will feature prominently throughout the next few months of trading.

GBP was buoyed against most currencies as the news that CPI inflation is more ‘sticky’ than previously thought came to the fore as the figure printed at 1.8% against a consensus view of 1.5%. This is mainly due to the weak pound and the subsequent drop off in imports that we highlighted last week after the inflation report.

The European single currency also enjoyed some good data as the ZEW business sentiment survey jumped to its highest level in 3 years as the German economy continues to move out of recession. Industrial orders, alongside last week’s GDP figures, have shown a new strength to Germany. Euro strengthened against USD and JPY after the result but weakened against GBP as UK CPI was bought more heavily.

Data today is dominated by the Bank of England minutes from the latest meeting. This was of course the meeting in which they decided to extend the quantitative easing scheme by £50bn. Other data includes Eurozone construction output and UK CBI distributive trends.

We are launching our ‘Market Round-up’ podcast today: this will provide a simple audio rundown of the market movements over the day and will cover everything you need to know from the FX, equity and business worlds with the same mix of knowledge, humour and succinctness that these emails do in the morning. The first episode will be available for download from here from 5pm BST today.

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