Daily Market Commentary 20th August 2021

The Fed minutes triggered a selling wave across equity markets which rolled through Asian markets, European markets and back to the US open. Markets are dependent on the lifeblood of Government stimulus and low interest rates, in the form of fiscal and monetary liquidity. The Fed telegraphed their intention to ‘taper’ QE this calendar year, which set off a negative reaction in equity markets, although they later clarified, it may not mean interest rate rises. The Dollar has also been a beneficiary, more as a safe haven, than a positive magnet. The EUR crashed to 1.1675, while the GBP fell back to 1.3640, despite their apparent economic resurrection.

The Australian Unemployment number surprisingly fell to 4.6%, from 4.9%, against all expectations. Markets had expected a rise in Unemployment, as half the country is in a severe state of lockdown? In reality this is probably what happened, but the data does not reflect that, with all those not working and locked up in there homes still considered working. It is a complete farce, as most official measures of employment around the world are. It is the trend and the detail where the true story is told. The reality hit home in the currency which plummeted to 0.7140, enhanced by the stronger reserve, while the NZD crashed to 0.6810!

Global economies are under immense pressure with the political lockdowns destroying business. Politicians will be judged poorly by their destructive solutions to the ‘so called pandemic’. It is far more political, than medical,  the problems that the world economies face.