Daily Market Commentary 16th July 2020

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The rally in US equity markets continued over night, as ‘Moderna’ announced positive news on their virus vaccine, while infection rates continue to climb around the globe. US Manufacturing and Industrial Production both posted strong gains for the month, while the annual contractions improved from devastating lows. Goldman Sachs had a blowout earnings result, as many of the Banks take advantage of Government rollouts, clipping the ticket. Market confidence allowed the US Dollar to continue to ease, with the EUR trading above 1.1400, while the Yen rallied to 106.90. The Bank of Japan left rates unchanged and promised unlimited purchases of Government debt, observing positive signs in the economy emerging.

UK Inflation turned positive overnight, beating dull expectations, as green shoots pushed the GBP back to 1.2580. Australian and NZ inflation reports are set to be released today, which will give a glimpse to economic growth, but this is a double edged sword. The inflation reports reflect growth, but is also a direct translation of big cost-of-living rises. The AUD Dollar took advantage of the softer reserve, briefly regaining 0.7000, while the NZD attempts to consolidate around 0.6550. Political upheavals and domestic volatility is likely to continue in NZ, as the general election fast approaches, set down for September 19th.

The 1,000 lb gorilla in the room remains the Chinese and the Geo-Political situation and developments. Sanctions and penalties, for their aggressive behaviour this year, continues to build and the trade implications are what will really impact the trade exposed economies and currencies.