The reverberations from Friday’s incredibly strong US jobs report continue to echo through markets. USD has been consolidating at a higher level, while US indices have already started to give back some of yesterday’s dead cat bounce. With governments and banks open again after yesterday’s partial holiday, action could pick up again today. Inflation numbers from Germany and Italy came in near expectations, cooling some of the recent deflation fears and taking some of the pressure for further action off of the ECB. This has enabled EUR, DKK and CHF to rebound. On the other hand, GBP has continued to slide as inflation came in below expectations for the UK. Although some appear to have taken this to suggest that the Bank of England may not be so quick to tighten or taper, it’s important to remember that UK inflation has been running much higher than on the continent. Because of this, deflation is not an issue at this point for the UK, different factors are at work driving monetary policy. Tomorrow’s UK employment report could spark more action in Sterling and the FTSE. Overall, markets continue to digest the flood of news we saw last week, particularly the ECB rate cut and spectacular US payrolls. Economic News Significant economic announcements released yesterday afternoon and overnight include: US Chicago Fed 0.14 vs street 0.15 UK consumer prices 2.2% vs street 2.5% UK retail prices 2.6% vs street 2.9% UK producer input prices (0.3%) vs street 0.1% UK producer output prices 0.8% vs street 1.0% Germany consumer prices 1.2% in line Italy consumer prices 0.8% vs street 0.7% India consumer prices 1.01% vs street 9.9% India industrial production 2.0% vs street 3.5% NZ house prices 1.6% vs previous 0.8% NZ house sales 2.1% vs previous 19.0% Economic reports due later today include: There are no major releases scheduled for North America later today.

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