Daily Market Commentary 30th July 2021

The Fed allowed markets to prevail, with the green light on monetary policy and lack of action to confront inflation. Modern Monetary Policy is monetization and is the cardinal sin of orthodox monetary policy. It has been embraced and appears to be working well, so far. Inflation is here with interest, despite attempts to remove key components, to sanitise the reality. US Equities moved towards record levels and the Dollar retreated. The EUR rallied towards 1.1900, perhaps enhanced by charging German PPI, while the GBP pushed above 1.3950.

Commodity currencies embraced the softer reserve, with the NZD jumping back to 0.7000, while the AUD looked to regain 0.7400. NZ Business Confidence contracted 3.8%, but markets preferred the macro narrative, of a softer Dollar and head-sand burial from the Federal Reserve.

The Piper has his hand out.