August trading opened surprisingly flat, with currencies static and equity markets treading water. The only surprise movement was a downward push in US Bond Yields. The US 10 year fell back to 1.15%, hit by concerns about the economic recovery, with surging virus levels, slower than expected US GDP growth and rising inflation. The ISM Manufacturing numbers missed expectations, although the Manufacturing PMI was slightly higher. The EUR was flat, trading around 1.1860, while the GBP held below 1.4000.
The AUD pushed up to 0.7350, ahead of the RBA rate decision, while the NZD traded quietly above 0.6950. The RBA is likely to warn of inflationary pressures and risks of the virus damaging the economic recovery. Interest rates will remain at historical lows, but there may be some fiddling at the margins, in terms of QE and commentary. The Australian economy is sustaining severe damage, with severe lock-downs, enforced by the Police and even the army, in Sydney. Australia will pay a heavy economic price, for the bed-wetting politicians reactionary behaviour and extreme measures, being inflicted on the people.