Daily Market Commentary 23rd August 2021

Markets rebounded to close a week of losses in equity markets. The Fed has indicated that they will begin the ‘tapering’ of QE by the end of the year, but the clarification settled markets, which was they may just taper and not raise interest rates. This allowed a bounce in equities Friday. The USD remains strong as a safe haven play, with the EUR below 1.1700, while the GBP attempts to hold 1.3600.

The virus and political, social and economic reactionary policies has driven sentiment lower and hit the demand led recovery narrative. NZ and Australia are now both suffering extreme lockdown restrictions, which will severely damage the economic recovery. Commodity prices are now being impacted and this is directly effecting the associated currencies. The NZD is trading just above 0.6800, while the AUD has been battered and trades 0.7135.

The virus, growth and inflation will be major market influencers in the coming week!