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Globally Central Banks are being forced into hawkish monetary policy, to tighten up the liquidity in the system and slow down inflationary growth. The Bank of England and ECB have confirmed further rate rises are on the way. The recession in Europe is killing demand and the Chinese recovery remains restrained, thus impacting commodity prices and the associated currencies.

All the attention now turns to tonight’s UK GDP number and the US PCE inflation indicator. The Fed’s Bank Stress tests passed with flying colours, but German inflation has turned north again, and any hint of a reversal in the US PCE number, will have dramatic consequences. Commodity currencies are feeling the impact of slower demand and recessionary pressures enveloping Europe and spreading around the world.

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