Collinson Forex Daily Market Commentary

Daily Market Commentary

The Fed left rates unchanged, noting that inflation was heading in the right direction and they were considering rate cuts in September. This was enough for equity markets to rally strongly and the US Dollar to soften. Fed Chairman Powell also spoke of a weaker labour market, as confirmed by the latest ADP Jobs report,  while economic growth remains strong. The quandary the Fed has, is to balance inflationary pressures, as seen in Europe. The ECB began rate cuts and the latest inflation numbers, released this week, shows a reversal in inflation trends. Inflation turned positive, reversing a string of recent falls, and this trend was confirmed in the latest EU data, following rises France, Italy, Germany and Poland. The weaker US Dollar allowed the EUR to rise to 1.0820, while the GBP traded 1.2850 ahead of the Bank of England rate decision tonight.

The Bank of Japan raised interest rates by 0.25%, also confirming massive currency intervention in July, to support the Yen. Japan has seen a spike in inflation and a corresponding fall in the currency. The Bank of Japan has a lot of work to do. The softer reserve allowed the NZD to bounce to 0.5850, boosted by stronger Business Confidence, while the AUD stabilised around 0.5850. Market attention now turns to the Bank of England IRD tonight, and the important Non-Farm Payrolls.

Paul Bettany   I   Collinson Forex Limited    Collinson & Co.  

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