The exuberance following the Fed’s rate cut and three further projected rate cuts, this year, mellowed in markets overnight. US Bond Yields returned to previous levels and the US Dollar rebounded strongly. The EUR slipped back below 1.1800, while the GBP slumped to 1.3550, following the Bank of England rate decision. The BofE left rates unchanged, despite a fall in the latest inflation reading and a surprisingly positive recent GDP growth number. The UK is buffeted with political and social unrest, only adding to their dire economic woes. Luckily, they were blessed with some respite, with a full and official state visit, by POTUS.The initial reaction of the Fed rate decision was to crush the reserve and commodity currencies soared, following the rate decision. Reality hit back like a sledgehammer, with the AUD crashing back towards 0.6600, while the NZD surrendered 0.5900. The latest Q2 NZ GDP growth data was released yesterday and it was a shocker. The NZ economy contracted 0.9%, in Q2, reflecting the deep recessionary economic conditions the country suffers. The Government needs to stop blaming the past and international trade conditions. They need to urgently employ pro-growth economic policy and a decent Finance Minister.
