Daily Commentary 30/10/2015

The rally in the Dollar, after the Fed indicated a rate rise in December, ran out of steam overnight as markets digest the future. The EUR traded 1.0950, while the GBP attempted to regain 1.5300, as equities slipped. The Feds bullish commentary, due to stronger economic circumstances, relies on strong Labour markets and normalised inflation. Labour markets are statistically corrupted and real Unemployment in most western economies is double figures. The real measures are looking at participation rates and these give a more accurate picture. Inflation has been nonexistent, despite record monetary expansionism, due to flat growth. This was again front and center in the U.S., with annualised GDP coming in at 1.5%, from 3.9%! This contradicts the Feds observations and is reflected in the weakening Dollar. The banal state of liquidity-impacted global currencies has led to commodity currencies taking direction from the associated commodity prices. The AUD has been hit hard, trading below 0.7070, while the NZD holds under 0.6700. The RBNZ held interest rates, as expected, with commodity prices having the desired impact.