Originally published by AxiTrader
Key Takeaway
What a difference six months and a rally in commodity prices makes.
Inflation across the globe has suddenly printed much higher, and is rising much faster, than forecasters and traders expected.
Clearly this has implications for global asset prices and it neatly fits with the recent run of broader global data which is also printing better than expected.
What You Need To Know
Something strange happened while traders and investors were focussed on negative interest rates and deflation. Inflation started to rise. And it did that at such a rate that the Citibank inflation surprise index is at it's highest level in 5 years.
That is, while it was clear that the rally in oil would be an important driver of the base effect of global inflation its seems that economists, investors and traders are still yet to catch up with the renewed inflation pulse.
Source: Bloomberg
Certainly many suggest that this inflation pulse will wash through. But the improved outlook for global economic data we have seen in recent months reinforces the notion that inflation is on the rise and may soon be back inside the ranges which central bankers across the globe are looking for.
Naturally that has implications for monetary policy across the globe which in turn will impact forex rates.
Maybe 2017 won't be the one way traffic for the US dollar many thought.
Have a great day's trading.