Daily Market Commentary 2nd August 2021

Markets closed lower on Friday, but still close to record highs, as inflation drags sentiment lower. PCE is the measure the Fed use to gauge inflation in the USA and this was released Friday, coming in at 4% p.a., which is a steep climb and much higher than expected. Inflation is the only threat to Modern Monetary Policy and it is real. US GDP came in at 6.5% p.a., dramatically lower than the expected 8.4%, which is a major concern. The US Dollar remains stable, with the GBP falling to 1.3890, while the EUR pushed up to 1.1860.

The University of Michigan Economic Sentiment was lower, in line with expectations, while EU GDP begins to rebound. Australian PPI continues to push upwards, as does inflation, which is around 13 year highs. The AUD fell back to 0.7330, while the NZD dropped to 0.6960. The RBA will announce their latest monetary policy next week, which is expected to include warnings over the virus and the latest lock-downs, smashing the New South Welch economy. They will be followed by the Bank of England, which will probably be looking to combat inflationary pressure, as their economy successfully reopens.

The coming week has an avalanche of economic data releases, around the globe, culminating in the Non Farm Payrolls numbers at the end of the trading week.