Collinson FX Market Commentary - Feb 3 - USD and GBP soften

by Collinson FX on 2 Feb 2017 Collinson FX Market Commentary - Feb 3 - USD and GBP soften

The Fed (US Federal Reserve) left rates unchanged, as expected, allowing the Dollar to soften. The EUR jumped to 1.0800, while the Yen moved to 112.50, with expectations of a rise at the next FOMC meeting. The GBP did not build on recent gains, despite a surge after a convincing parliamentary vote on 'Breixt', settling around 1.2550. This was due to the Bank of England report citing weak inflation growth.

The Dollar was not assisted by the Challenger Jobs Report, which reflected a jump in retail job cuts, ahead of the all important Non Farm Payrolls tonight. The NZD continued to push towards 0.7300, boosted by a weaker reserve, while the AUD stabilised (0.7570) after bullish trade data.

Non Farm Payrolls are expected to be strong and Dollars upward momentum may resume. The only proviso is the daily earthquakes from the Whitehouse.

Collinson FX Market Commentary - Feb 2 - US allegations of currency manipulation

Feb 2 - US accusations of currency manipulation by China, Japan and the EU have sparked an outbreak of a currency war!

The EU refute the manipulation of their currency, but the whole concept of a single currency in a disparate group of members with their own economies with monetary/fiscal independence, is a contradiction in terms. The weaker member economies drag the EUR lower, allowing the stronger export nations (namely Germany), to take full advantage. The whole single currency concept is founded on a series of implausible assumptions. The ECB has used monetary policy to weaken the currency, but so have all major Central Banks, including the Fed in the US.

The ADP reported a surge in private sector jobs, while the ISM Manufacturing number also posted gains. This improved the Dollar position, with the EUR slipping back to 1.0740, while the GBP confounded the reserve, by rallying to 1.2620. The NZD has been the star performer, of late, but experienced a sudden reality check with the release of employment data.

NZ Unemployment spiked to 5.2%, which is a dramatic turnaround, plunging the KIWI back to below 0.7250. The AUD managed to hold above 0.7550, with indifferent recent form, while reversing recent moves in the cross rate. Trump and his administration continue to dominate markets and supportive economic data only adds to momentum. The FOMC decision is likely to be STET, with further action expected in the next meeting, with a rise expected.

Collinson FX Market Commentary - Feb 1 - New Administration lifts NZ and AUD's

Feb 1 - US Equity markets continued to give ground with the Trump executive actions being blamed. The latest shock to the snowflake media was the sacking of the acting Attorney General. This action was taken, because the Obama appointed official, refused to execute her job. These actions are likely to continue and surprises many as power shifts to a strong executive.

The market fallout is impacted by the immigration and trade attitude of the administration. Trump adviser, Peter Navarro, opined on the exploitation of a 'grossly undervalued EURO' to take advantage of global trade. This has been a trademark of a weak EURO and underwritten the German Export behemoth and undermined other members. European economic data was stronger in Employment, GDP growth and the CPI.

This did little to undermine the negative sentiment on equity markets. The Dollar also weakened, with the EUR rising to 1.0780, while the JPY traded below 113.00. This was reflected on commodity currencies, with the NZD breaking above 0.7300, while the AUD was steady on 0.7570. The Trump administration continues to dominate equity and currency markets.

Collinson FX Market Commentary - Jan 31 - Dow falls in shock

Jan 31 - Trump continues to dominate markets and the news. This time it is his immigration/security policy, which has introduced a temporary ban on seven countries with terrorism problems, closely following 'the Wall'! Markets are impacted by the effect on trade and the US policies addressing bi-lateral agreements and free flow of goods, services and labour.

The Dow fell back below 20,000, amidst concerns, with many shocked by all the dramatic actions by the new administration. The Dollar was steady against the EUR, trading below 1.0700, although gains were posted against the GBP and Yen.

Commodity currencies remained steady, with the AUD trading around 0.7550, while the NZD crept up to 0.7275.
Trump remains the only show in town so fasten your seat belts for yet another action packed week!

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