Markets reopened in the US, after the Independence Day long weekend and promptly crashed. The correction followed a week of gains for equity markets, while the US Dollar continues to rally. The EUR crashed to 1.1820, following some dreadful economic data and the GBP slipped below 1.3800. The important German ZEW Economic Sentiment crashed, along with Factory Orders, which will worry markets. The US ISM Non Manufacturing PMI remains at near record highs, while Bond Yields continue to drift lower, not impacting the surging US Dollar.
The RBA left rates unchanged, as expected, but were bullish on the economic outlook and may consider raising rates sooner than previously indicated. ‘The economy was expanding and the recovery was quicker than expected’. They did consider the Housing Bubble and associated Household Debt a growing problem. The AUD fell below 0.7500, while the NZD held 0.7000, following some strong Business Confidence numbers.
Markets will look towards the release of the FOMC minutes tonight.