Daily Market Commentary 19th July 2021

The University of Michigan Economic Sentiment report slumped on Friday, contradicting the narrative of a rapidly improving economy and labour market in the USA. Inflation is starting to sink in and the implications for the Federal Reserve are dire. They will be forced to slow the massive QE infinity program, which will tighten monetary conditions. The US Dollar remains strong, with the EUR slipping below 1.1800, while the GBP plunged to 1.3750.

Commodity currencies also suffered, with the NZD trading below 0.7000 and the AUD crashing under 0.7400. Close attention will be paid to inflation, CPI and PPI numbers in the coming week and the ECB rate decision. They will not be changing any rates or monetary policy, as the weak growth in the EU, has reduced inflationary pressures.