Aussie dollar rallies above 67 US cents

Key Movers

The downside surprise to US Consumer Price Index on Thursday night continues to reverberate around markets. US equities continued to power higher, the S&P500 up 0.9% on Friday, the USD slumped further, and commodities rallied strongly. Investors’ appetite for risk surged on Thursday following the release of cooler-than-expected US Consumer Prices Index data. Yearly inflation slowed down to 7.7% in October from 8.2% in the previous month, beating expectations of an 8% reading. These figures suggest that inflationary pressures might have peaked and provided some leeway to the US central bank to ease its monetary tightening cycle over the next months. Looking ahead today in the United States and the economic calendar is rather thin today with the only relevant indicator being the Preliminary Michigan Sentiment Index, which has eased beyond expectations, 54.7 from 59.9 in October while the consensus anticipated a softer decline to 59.5.
It was also announced that China is relaxing some of its strict COVID-19 restrictions and cutting quarantine periods has eased concerns about the potential impact on the global economy of a new set of lockdowns which has boosted investor sentiment further. New guidance released by the Chinese authorities on Friday confirmed that international visitors and close contacts would now need to spend 5 days in a quarantine facility and 3 days at home (down from the current 10-day requirement) while airlines would no longer be penalised for bringing Covid-positive passengers to the country, as foreshadowed by media reports last week. An eventual shift away from the Covid-zero policy would remove a major headwind to global growth.