The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

This morning, inflation is the key theme with the Bank of England releasing the latest CPI (3.5% expected) and RPI levels (4.8% expected) at 09.30.

When inflation exceeds 3%, the governor of the bank of England is obliged to write a letter explaining the situation to the chancellor.

This can be a dry affair, but Mervyn King could use the opportunity to make some heavy points so there could be some action as the inflation numbers are released and the letter hits the newswires.

The Pound/Dollar is the one to watch for this. The pound has been dropping on speculation that Osbourne will able to get his cuts through.

Ironically it was the fear of the spending cuts not happening that was harming the pound previously. Now traders are speculating that the spending cuts will leave room for UK interest rates to stay lower for some time, which in turn hurts the pound in the medium term. Although the theory is that this should be good for Sterling in the long term.

In addition today, we have European inflation numbers at 10.00, following by US building permits and PPI at 13.30 PM.

Earlier today the Royal Bank of Australia released the minutes of its last meeting where they stated that rates were ‘well placed’. The statement has hit the Australian Dollar/US Dollar Spreads on speculation that another round of rate hikes won’t be seen for some time.

Aussie Dollar Drops as Commodities Prices Fall

Talking of the Aussie Dollar…it is interesting to note that the Australian dollar has accelerated its slide as commodities prices have dropped.

With all the talk of austerity measures across Europe, demand for raw commodities may be down on previous years, hurting a core part of the Australian economy.

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