The latest inflation indicators in the US went above forecasts (CPI and PPI indices). Especially sharply jumped producer price inflation, which played in favor of the dollar.

We have been living for a long time in a period of extremely low inflation and low rates of the main world central banks. Low inflation is observed in developed economies like the USA, Europe, Japan, Canada, Australia. In developing countries, inflation is quite noticeable.

Let me remind you that the extremely low rates of the main Central Banks (FRS, ECB, Banks of England, Japan, Switzerland) were set in the situation of the global economic crisis of 2008-2009 which is more than 10 years ago, where most FOREX traders have never seen such high rates. The highest recorded rate from developed countries was at 1.625% by the Fed. However, if we take the average Fed rate over the past 50-70 years, it will be 4%. Back in early 2000, there was a dollar rate of 6% per annum.

It is clear that the rate depends on inflation. In case of inflation growth above 2.5% per annum, the main world central banks will simply be forced to raise rates. Thus, 11 years of low rate is the result of extremely low inflation. The relationship between the Central Bank rate and inflation is a rather mysterious question, despite a long history of research. Either low inflation causes rates to be low, or low rates reduce inflation due to increased business activity and competition. This issue has not been resolved so far.

The effect of low inflation in early 2000 was raised by the legendary Fed head Alan Greenspan. From his point of view, China is the main absorbent of excess inflation as China deliberately underestimates the renminbi, buying dollars and euros from the market into Central Bank reserves, thereby underestimating Chinese export prices. This makes goods from China cheap in the US and Europe, and this holds back prices in general, lowering inflation.

Whether this is true or not, we are already entering a period when China can no longer underestimate the prices of its goods, for the growth of wealth in China, at least in large cities, as well as the growth of workers' salaries inevitably leads to higher prices for goods from China to inflation, since China, as a rule, sets the lower bar for prices for a wide range of industrial goods. At the same time, China's growing demand for food and other commodities is raising prices for these items.

Thus, there is a considerable chance that we are already entering a period of rising inflation and the inevitably following increase in interest rates of the main Central Banks.

There was another opinion about low inflation - romantic, I would say. The opinion is that, we live in an age of new information technologies and the rapid growth of the volume of intellectual goods. For the production of which, much less raw materials are needed than for classical goods and therefore the price increase is minimal.

The economy has experienced many new technologies but at the same time, there have been periods of high inflation.

It is rather worth saying that the growth of the world economy has been going on for 11 years already, and at the end of the growth cycle, inflation will inevitably begin to grow. This means that the end of the economic cycle is not far away.

EURUSD: We keep sales from 1.0990, we sell from rebounds to the top.