Daily Market Commentary 29th July 2021

The Fed left rates unchanged and QE in place, which surprised no-one. The narrative was that the economy was improving, but not enough to remove monetary stimulus, as the threat of the virus remains. Inflation was largely ignored and the virus and the economic consequences remains the Feds raison d’etre, or perhaps excuse? Inflation remains at record levels and the ‘transitory’ argument will last only so long. US equities were steady, as was the US Dollar and US bonds. The EUR traded 1.1800, with depressed consumer confidence, while the GBP trades just shy of 1.3900.

The AUD remains under extreme pressure, due to the economic lock-downs and restrictions around the economy. The NZD was also weak, trading down towards 0.6900, while the AUD fell to 0.7320. Australian inflation was slightly higher, 3.8% p.a., which is high but it is the trajectory that is the real concern.

Inflation/CPI and PPI remain key indicators markets will now focus closely on.